A company has preferred stock that can be sold for $21 per share. The preferred stock pays an annual dividend of 3.5% based on a par value of $100. Flotation costs associated with the sale of preferred stock equal $1.25 per share. The company's marginal tax rate is 35%. Therefore, the cost of preferred stock is
A) 18.87%.
B) 17.72%.
C) 14.26%.
D) 12.94%

Answer rating: 100% (QA)

Answer The correct option is B Solution i cost of preferred stock 35 21 125 1772 17... View the full answer