Problema companys perpetual preferred stock currently sells, Ask an Expert

Accounting

Problem:

A company's perpetual preferred stock currently sells for $92.50 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.

Required:

Question: What is the firm's cost of preferred stock?

Note: Please show how to work it out.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91168292

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