Pangbourne Whitchurch has preferred stock outstanding. The stock pays a dividend of $4 per share, and sells

Question:

Pangbourne Whitchurch has preferred stock outstanding. The stock pays a dividend of $4 per share, and sells for $40. The corporate tax rate is 35%. What is the percentage cost of the preferred stock?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...