Assignment: Week 5 Homework gge Leaming Assignment Score: 0.00% Questions Proble

Question

Assignment: Week 5 Homework gge Leaming Assignment Score: 0.00% Questions Problem 10.14 Save Subinit Assignment for Grading 1. " Question 2 of 8 Check My Work (3 remaining) 3. 10-4: Cost of Preferred Stock, rp Cost of Preferred Stock Including Flotation Trivoli Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currenth selling for $112.50; but flotation costs will be 7% of the market price, so the net price will be $104.63 4. 6.O per share. What is the cost of the preferred stock, including flotation? Round your answer to two decima places Check My Work (3 remaining) lcon Key e Question 2 of B s Problem 10.14 Save Subrnit Assignment for Grading nore) 48705217688409737711656137&elSBN-978130...; 22 x.html?nbld-825492&nbNodeld-317; https://ng.cengage roosooaceploymentid 48705217688409737711656137&elSBN-978130.;

Explanation / Answer

Answer:

Cost of Preferred Stock = Dividend / Current Price * (1 –Flotation Cost)
Dividend per Share = $11.00
Current Price = $112.50
Flotation Cost = 7%

Cost of Preferred Stock = 11.00 / 112.50 * (1 – 0.07)
Cost of Preferred Stock = 11.00 / 104.63
Cost of Preferred Stock = 0.1051
or Cost of Preferred Stock = 10.51%

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.