Builtrite Auto has preferred stock shares outstanding that pay an annual dividend of $4 and are currently selling for $74 a share. What is the after-tax cost of preferred stock if the flotation cost...

Builtrite Auto has preferred stock shares outstanding that pay an annual dividend of $4 and are currently selling for $74 a share. What is the after-tax cost of preferred stock if the flotation cost for new shares is 5% and Builtrite is in the 34% marginal tax bracket?

A) 5.41%

B) 3.57%

C) 5.69%

D) 3.76%