The cost of perpetual preferred stock is found as the preferred's annual dividend divided by the market price of the preferred stock.No adjustment is needed for taxes because preferred dividends, unlike interest on debt, is not deductible by the issuing firm.

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This statement is true. The cost of perpetual preferred stock can be calculated by dividing the annual dividend by the market price of the preferred stock. Unlike interest on debt, preferred dividends are not deductible by the issuing firm, so there is no adjustment needed for taxes.

The Cost of Perpetual Preferred Stock Is Found as the Preferred's