The after-tax cost of preferred stock to the issuing corporation
A) is the same as the before-tax cost.
B) is usually lower than the cost of debt.
C) is dependent on the firm's tax bracket.
D) None of these options are true.

Question

Quizplus · Accepted Answer

The after-tax cost of preferred stock to the issuing corporation is the same as the before-tax cost because dividends on preferred stock are not tax-deductible.

The After-Tax Cost of Preferred Stock to the Issuing Corporation