Question

Torch Industries can issue perpetual preferred stock at a price of $71.00 a share. The stock would pay a constant annual dividend of $6.50 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places.

Answer 1

the company's cost of preferred stock, rp is = 9.15%

Step-by-step explanation:

step 1. Consider the following formula.

Cost of preferred stock = annual dividend / Price *100

Step 2. Set the values of the variables.

= $ 6.5/$ 71*100

step 3. Solve.

= 9.15%

Answer : 9.15 %