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What is the firm cost of preferred stock

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Reference no: EM133011226

Question - Costly Corporation is considering a new preferred stock issue. The preferred would have a par value of $500 with an annual dividend equal to 16.0% of par. The company believes that the market value of the stock would be $462.00 per share with flotation costs of $18.00 per share. The firm's marginal tax rate is 40%. What is the firm's cost of preferred stock?

Reference no: EM133011226

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