Question

Cost of Preferred Stock Torch Industries can issue perpetual preferred stock at a price of $57.00 a share. The stock would pay a constant annual dividend of $6.00 a share. What is the company’s cost of preferred stock, ?

Answer 1

the company’s cost of preferred stock is 10.53%.

Step-by-step explanation:

given information:

perpetual preferred stock = $57.00

a constant annual dividend = $6.00

to determine the company’s cost of preferred stock we can use the following formula

`cost of preferred stock = ( annual dividend)/(preferred stock)`

`= (6.00)/(57.00)`

`=10.53`%

therefore, the company’s cost of preferred stock is 10.53%.