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Dwmonstrate what is cost of preferred stock to the company

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Reference no: EM132600592

Problem 1: CTL Corporation has 30% of its financing in preferred shares. The shares are currently trading at a market price of $55. The book value of the shares is $60, and they pay a dividend of $4.05. CTL's corporate tax rate is 35%. What is the cost of preferred stock to the company?

Option 1: 7.36%

Option 2: 4.79%

Option 3: 4.39%

Option 4: 6.75%

Reference no: EM132600592

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