Your corporation has a marginal tax rate of 35% and has purchased preferred stock in another company. The before-tax dividend yield on the preferred stock is 8.75%. What is the company's after-tax return on the preferred, assuming a 70% dividend exclusion? (Round your final answer to two decimal places.)
A. 9.63%
B. 7.83%
C. 5.95%
D. 7.20%
E. 9.55%
Answer: B
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