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Question
A company's perpetual preferred stock currently sells for $92.50 per share, and it pays an $8.00 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the issue price. What is the firm's cost of preferred stock?a. 7.81%
b. 8.22%
c. 8.65%
d. 9.10%
e. 9.56%
Answer
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