What is the current price of preferred shares? (Round intermediate calculations

Question

What is the current price of preferred shares? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)

What is the cost of the new preferred shares for RetRyder? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)

RetRyder Hand Trucks has a preferred share issue outstanding that pays a dividend of $1.30 per year. The current cost of preferred equity for RetRyder is 10.10 percent. If RetRyder issues additional preferred shares that pay exactly the same dividend and the investment banker retains 5.60 percent of the sale price.

What is the current price of preferred shares? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)

What is the cost of the new preferred shares for RetRyder? (Round intermediate calculations to 4 decimal places, e.g. 1.2514 and final answer to 2 decimal places, e.g. 15.25%.)

Explanation / Answer

Dividend on preferred shared outstanding =$1.30

Cost of preferred equity =10.10%

Cost of Preferred Stock =Annual Dividend on Preferred Stock/Current Market Price of Preferred Stock

10.10=1.30/Current market price

Current market price =12.87

Cost of new preferred equity =1.30/12.87 +5.60 *12.87=10.10=17.1

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

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