1. Determine the required rate of return on preferred shares that provide a $7.00 annual dividend if they are presently selling for $65.
a- 5.0%
b- 10.8%
c- 7.0%
d- 4.4%
2. If the marginal tax rate is 40 percent, and the before-tax cost of debt is 7.5 percent, the after-tax cost of debt is closest to:
a- 3%
b- 45.00%
c- 6.05%
d- 4.5%