Beige Inc. plans to issue preferred stock that pays an $11.50 dividend per share and sells for $120 per share in the market. It will cost 4 percent, or $4.80 per share, to issue the new preferred stock, so Beige will net $115.20 per share. Which of the following is Beige's cost of preferred stock? (Round off the answer to two decimal places.)?
A. ?8.89 percent
B. ?12.25 percent
C. ?11.50 percent
D. ?15.20 percent
E. ?9.98 percent
Answer: E
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