A firm is paying an annual dividend of $4.00 for its preferred stock which is selling for $65.00. There is a selling cost of $3.00. What is the after-tax cost of preferred stock if the firm's tax rate is 36%? (Round your answer to 2 decimal places.)

Cost of preferred stock is 6.45%

Cost of preferred stock with selling cost = Dividend / (Selling price - selling cost))

Cost of preferred stock = 4.00 / (65 -3)

Cost of preferred stock = 4 / 62

Cost of preferred stock = 6.4516% or 6.45% when rounded to 2 decimal places 

Please note that after tax cost of preferred stock is same as before tax cost of preferred stock