Calculate the after-tax cost of preferred stock for Marriot Hotel Corporation, which is planning to sell $200 million of $4.15 cumulative preferred stock to the public at a price of $48 per share. Flotation costs are $2.50 per share. Marriot has a marginal income tax rate of 40%.
A. 5.86%
B. 9.76%
C. 9.12%
D. 5.47%