A corporation recently purchased some preferred stock that has a before-tax yield of 6.50%. The company has a tax rate of 38%. What is the after-tax return on the preferred stock? Assume a 70% dividend exclusion for tax on dividends. (Round your final answer to two decimal places.)
A. 5.87%
B. 5.76%
C. 6.05%
D. 6.68%
E. 6.85%
Answer: B
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