11/9. Medco Corporation can sell preferred stock for $80 with an estimated flotation cost of $3. It is anticipated that the preferred stock will pay $6 per share in dividends.
a. Compute the cost of preferred stock for Medco Corp.
b. Do we need to make a tax adjustment for the issuing firm?© BrainMass Inc. brainmass.com February 24, 2021, 2:30 pm ad1c9bdddf
Cost of preferred Stock = Dividend per share / ...
Shows how to calculate the cost of preferred stock and what tax treatment is required for preferred stock.