Greetings,

Please support to answer the below question whether True or False?

Since 50% of the preferred dividends received by a corporation are excluded from taxable income, the component cost of equity for a company that pays half of its earnings out as common dividends and half as preferred dividends should, theoretically, be

Cost of equity = r_s(0.50)(0.50) + r_ps(1 - T)(0.50)(0.50).