Van Dyke Corporation has a corporate tax rate equal to 33%. The company recently purchased preferred stock in another company. The preferred stock has an 8% before-tax yield. What is Van Dyke's after-tax yield on the preferred stock? Assume a 70% dividend exclusion for tax on dividends. (Round your final answer to two decimal places.)
A. 6.27%
B. 8.94%
C. 7.28%
D. 7.21%
E. 7.42%
Answer: D
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