A firm has issued preferred stock at its $125 per share par value. The stock will pay a $15 annual dividend. The cost of issuing and selling the stock was $4 per share. The cost of the preferred stock is
A. 7.2 percent.
B. 12 percent.
C. 12.4 percent.
D. 15 percent.
Answer:C
A firm has issued preferred stock at its $125 per share par value. The stock will pay a $15 annual dividend. The cost of issuing and selling the stock was $4 per share. The cost of the preferred stock is
A. 7.2 percent. B. 12 percent. C. 12.4 percent. D. 15 percent.