Bostwick Company's perpetual preferred stock sells for $85 per share, and it pays an $7.30 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the weighted average cost of capital (WACC)? Your answer should be between 7.20 and 11.52, rounded to 2 decimal places, with no special characters.
Bostwick Company's perpetual preferred stock sells for $85 per share, and it pays an $7.30 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the weighted average cost of capital (WACC)? Your answer should be between 7.20 and 11.52, rounded to 2 decimal places, with no special characters.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:Bostwick Company's perpetual preferred stock sells for $85 per share, and it pays an $7.30 annual dividend.
If the company were to sell a new preferred issue, it would incur a flotation cost of 4% of the price paid by
investors. What is the company's cost of preferred stock for use in calculating the weighted average cost of
capital (WACC)?
Your answer should be between 7.20 and 11.52, rounded to 2 decimal places, with no special characters.
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