By-way trucking has a 9 percent preferred stock outstanding


By-Way Trucking has a 9 percent preferred stock outstanding that is currently selling for $52 a share. The market rate of return is 12 percent and the firm's tax rate is 35 percent. What is By-Way's cost of preferred stock? Answer is 17.31% but why?

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Finance Basics: By-way trucking has a 9 percent preferred stock outstanding
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