4. A firm is paying an annual dividend of $2.65 for its preferred stock that is...

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4. A firm is paying an annual dividend of $2.65 for its preferred stock that is selling for $57.00. There is a selling cost of $3.30. What is the after-tax cost of preferred stock if the firm's tax rate is 21%? (6point) A) 3.30% B) 4.93% C) 5.79% D) 6.11% E) 3.89% Cost of preferred stock = Dividend/Net Proceeds Cost of preferred stock = 2.65/57-3.3 Cost of preferred stock = 0.0493 or 4.93% After tax cost of preferred stock = Cost of preferred stock x (1-Tax rate) After tax cost of preferred stock = 4.93% x (79%) After tax cost of preferred stock = 3.89% 4. A firm is paying an annual dividend of $2.65 for its preferred stock that is selling for $57.00. There is a selling cost of $3.30. What is the after-tax cost of preferred stock if the firm's tax rate is 21%? (6point) A) 3.30% B) 4.93% C) 5.79% D) 6.11% E) 3.89% Cost of preferred stock = Dividend/Net Proceeds Cost of preferred stock = 2.65/57-3.3 Cost of preferred stock = 0.0493 or 4.93% After tax cost of preferred stock = Cost of preferred stock x (1-Tax rate) After tax cost of preferred stock = 4.93% x (79%) After tax cost of preferred stock = 3.89%