Question: Meldon Corp. is considering issuing preferred stock with a par value of $50. The stated dividend is $4. On the advice of its investment banker,

Meldon Corp. is considering issuing preferred stock with a par value of $50. The stated dividend is $4. On the advice of its investment banker, Meldon anticipates selling the shares to investors for$49.00. Flotation costs are 5% of the issue price. What is the cost of preferred stock to the issuer?

A. 8.59%

B. 8.16%

C. 8.42%

D. 4.00%

E. 8.00%

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