Question: Lyla Limited can issue preference shares with a nominal value of R100 and a 7% annual dividend. Flotation costs of R6 are payable per share.

Lyla Limited can issue preference shares with a nominal value of R100 and a 7% annual dividend. Flotation costs of R6 are payable per share. Lyla Limited is subject to 28% tax. The cost of preference shares is closest to:

7.45%

5.36%

5.04%

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