Wk $2-$ Practice: Knowledge Check $[$due Day $5]$

Medco Corporation can sell preferred stock for $$116$ with an estimated flotation cost of $$6.$ It is anticipated the preferred stock will pay $$5$ per share in dividends.

a$.$ Compute the cost of preferred stock for Medco Corp. $($Input your answer as a percent rounded to $2$ decimal places.$)$

$$

eBook

Cost of preferred stock

$5\mathrm{.}00$

$\%$

References

b$.$ Do we need to make a tax adjustment for the issuing firm?

Yes

No