Answer:
13.43%
Explanation:
A firm is paying an annual dividend of $9.00
The preferred stock is sold at $69.00
The selling cost is $2
The tax rate is 31%
Therefore the after tax cost of preferred stock can be calculated as follows
= dividend/ price - flotation cost
= 9/69-2
= 9/ 67
= 0.1343 × 100
= 13.43%
