Question: Melba's Toast has a preferred share issue outstanding with a current price of $20. The firm is expected to pay a dividend of $2.34 per

Melba's Toast has a preferred share issue outstanding with a current price of $20. The firm is expected to pay a dividend of $2.34 per share a year from today. What is the firm's cost of preferred equity?

A. 13.00%

B. 12.25%

C. 10.50%

D. 11.70%

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