A firm has determined it can issue preferred stock at $115 per share par value. The stock will pay a $12 annual dividend. The cost of issuing and selling the stock is $3 per share. The cost of the preferred stock is
A. 6.4 percent.
B. 10.4 percent.
C. 10.7 percent.
D. 12 percent.
Answer:C
A firm has determined it can issue preferred stock at $115 per share par value. The stock will pay a $12 annual dividend. The cost of issuing and selling the stock is $3 per share. The cost of the preferred stock is
A. 6.4 percent. B. 10.4 percent. C. 10.7 percent. D. 12 percent.