ng.cengage htmlmbld $72827&nbNodeld-207595027deploymentid; 5 5516513017465050119

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ng.cengage htmlmbld $72827&nbNodeld-207595027deploymentid; 5 55165130174650501190349062kelsBN-978 81305635075ms 07595366 5% MINDTAP Assignment 10- The Cost of Capital Due Tomorrow at 1 1 PM CST Back to Assignment Attempts: Do No Harm: /3 4. Cost of preferred stock Aa Aa Preferred stock is a hybrid security, because it has some characteristics typical of debt and others typical of equity. The following table lists various characteristics of preferred stock. Determine which of these characteristics is consistent with debt and which is consistent with equity Debt Equity Characteristics Has a par, or face, value Usually has no specified maturity date. G Consider the case of Turnbull Enterprises preferred stock in its capital structure in the future. Turnbull has found some institutional investors that are willing to purchase its preferred stock issue provided that it pays a perpetual dividend of $11 per share. If the investors pay $97.95 per share for their investment, then Turnbull's cost of preferred stock (rounded to four decimal places) will be At the present time, Turnbull Enterprises does not have any prefered stock outstanding but is looking to include 11.7915% 12.3530% 11.2300% 10.1070%

Explanation / Answer

QUESTION - 1

QUESTION - 2

Cost of preferred capital = Dividend / Price of share * 100 = 11/ 97.95 * 100 = 11.23 % ...............final answer

debt equity Has a par or face value yes ** Usuall has no specified maturity date Yes **Note par or face value is also for equity…..check if double Selection is allowed or not. If allowed Mark equity also

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