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The firm's cost of preferred stock financing is %. (Round to two decimal places.)

The firm's cost of preferred stock financing is %. (Round to two decimal places.)

Essentials Of Investments
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
Problem 1PS
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(Cost of preferred stock) The preferred stock of Gator Industries sells for $35.21 and pays $2.74 per year in dividends. What is the cost of preferred stock financing? If Gator were to issue 472,000 more preferred shares just like the ones it currently has outstanding, it could sell them for $35.21 a share but would incur flotation costs of $2.94 per share. What are the flotation costs for issuing the preferred shares and how should this cost be incorporated into the NPV of the project being financed? The firm's cost of preferred stock financing is %. (Round to two decimal places.)
Transcribed Image Text:(Cost of preferred stock) The preferred stock of Gator Industries sells for $35.21 and pays $2.74 per year in dividends. What is the cost of preferred stock financing? If Gator were to issue 472,000 more preferred shares just like the ones it currently has outstanding, it could sell them for $35.21 a share but would incur flotation costs of $2.94 per share. What are the flotation costs for issuing the preferred shares and how should this cost be incorporated into the NPV of the project being financed? The firm's cost of preferred stock financing is %. (Round to two decimal places.)
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