Problembosio incs perpetual preferred stock sells for 9750, Ask an Expert

Accounting

Problem:

Bosio Inc.'s perpetual preferred stock sells for $97.50 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors.

Required:

Question: What is the company's cost of preferred stock for use in calculating the WACC?

Note: Please provide reasons to support your answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91170282

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