2B4B COX COMPANY HAS SOLD 1,000 SHARES OF $100 PAR, 8% PREFERRED STOC...

134.

COS: 2B4b

LOS: 2B4b

Cox Company has sold 1,000 shares of $100 par, 8% preferred stock at an issue price of

$92 per share. Stock issue costs were $5 per share. Cox pays taxes at the rate of 40%.

What is Cox’s cost of preferred stock capital?

a.

8.00%.

b.

8.25%.

c.

8.70%.

d.

9.20%.