Register
A company's perpetual preferred stock currently sells for $92.50 per share, and it pays an $8.00 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.
72.0k views
1 vote
A company's perpetual preferred stock currently sells for $92.50 per share, and it pays an $8.00 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the issue price. What is the firm's cost of preferred stock?a. 7.81%b. 8.22%c. 8.65%d. 9.10%e. 9.56%

User Nimmy
by
5.3k points

1 Answer

1 vote

Answer:

d. 9.10%

Step-by-step explanation:

Cost of Preferred Stock

= Dividend / Price net of flotation costs

= Price net of flotation costs = (92.50 - (92.50 * 5%)) = 87.88

= 8/87.88

= 9.10%

User AdAstra
by
4.8k points
Ask a Question
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

5.9m questions

7.7m answers

Other Questions

_____ reminds customers and clients that they made a good choice in selecting a company with which to do business, or it reminds them of the good qualities of their purchase.​
Demonstrate how binomial nomenclature is related to classification systems by identifying the genus name and the specific name of the domestic cat felis catus
The dark printed words on the page of a book are easily read because they are printed on a light ground. this is an example of the principle of ____________.
On august 1 the darius co. purchased a photocopy machine for $8,000. the estimated annual depreciation on the machine is $1,680. if the company prepares annual financial statements on december 31, the
When president obama was elected, the u.s. economy was in trouble, and has slid into a recession. consumer spending was low and getting worse. in an effort to stop the decline, president obama proposed
Link Copied!