Problem:
Grill Works and More has 7 percent preferred stock outstanding that is currently selling for $52 a share. The stock's par value is $100. The market rate of return is 10 percent and the firm's tax rate is 35 percent.
Required:
Question: What is the firm's cost of preferred stock?
- 13.46 percent
- 8.88 percent
- 8.08 percent
- 11.06 percent
- 12.23 percent
Note: Provide thorough explanation of the given question.