Centre Bay Co. has 10 million preferred shares outstanding. The current market price of these preferred shares is $10.50 per share, and Centre Bay offers a dividend of $0.75 per share. If flotation costs are 8% before tax on a new issue of preferred shares, what is the component cost of preferred shares for Centre Bay given its tax rate of 33%?

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The formula to calculate the cost of preferred shar... View the full answer