A company's perpetual preferred stock currently sells for $82.50 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? 11.33% 10.21% 9.29% 9.08% 8.06%
A company's perpetual preferred stock currently sells for $82.50 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? 11.33% 10.21% 9.29% 9.08% 8.06%
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter11: Determining The Cost Of Capital
Section: Chapter Questions
Problem 3P: Cost of Preferred Stock
Duggins Veterinary Supplies can issue perpetual preferred stock at a price...
Question
![A company's perpetual preferred stock currently sells for $82.50 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?
11.33%
10.21%
9.29%
9.08%
8.06%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa40754ec-4849-4283-b005-57d1ba148cab%2F6e588f52-2338-4a9c-ac79-204f426472ab%2Fm0d4sdxj_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A company's perpetual preferred stock currently sells for $82.50 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?
11.33%
10.21%
9.29%
9.08%
8.06%
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