spartanag07

answer should be D, im pretty sure. 3.5/47 = 7.45%

tax only comes into play with debt as there are tax savings to be had on the interest you pay. remember that interest is a part of the income statement, more specifically, income from continuing operations. Dividends do not show up on the income statement, they are a part of SE.

You could come into a bit of a bind if the question mentions that the preferred stock must be bought back at a specific point in time. In that case, it may need to be treated as debt.