© 1998 The Dryden Press
kps = 8.84% kd = 10% T = 40%
kps, AT = kps - kps (1 - 0.7)(T)
= 8.84% - 8.84%(0.3)(0.4) = 7.78%
kd, AT = 10% - 10%(0.4) = 6.00%
A-T Risk Premium on Preferred = 1.78%
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