Question: An investor faces a combined (federal and provincial) tax rate of 42 percent, with provincial tax being 40 percent of federal tax. Current interest rates on long-term bonds are 11 percent. In order to invest in preferred shares, the investor demands an after-tax yield that is 2 percent higher than the after-tax yield on long-term debt. What before-tax dividend yield would preferred shares have to offer in order to just become attractive? Assume that the investor has exhausted any tax-exempt amounts of investment income.