Tunney Industries can issue perpetual preferred stock at a price of $56.50 a sha

Question

Tunney Industries can issue perpetual preferred stock at a price of $56.50 a share. The stock would pay a constant annual dividend of $6.50 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places.

%

Tunney Industries can issue perpetual preferred stock at a price of $56.50 a share. The stock would pay a constant annual dividend of $6.50 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places.

%

Explanation / Answer

cost of preferred stock=Annual dividend/Current pice

=(6.5/56.50)

which is equal to

=11.50%(Approx).

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