Question

Global Inc. Has a preferred share issue outstanding with a current price of $26.80. The firm is expected to pay a dividend of $1.90 per share a year from today. What is the firm's cost of preferred equity?

Answer 1

7.09 %

Step-by-step explanation:

Cost of preferred equity = Dividend / Market Price x 100

therefore,

Cost of preferred equity = $1.90 / $26.80 x 100 = 7.09 %