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%.