lquestiok 1&lushed; false&cld; 4706779&centerwin-yes; Managerial Finance_Fall 20

Question

lquestiok 1&lushed; false&cld; 4706779&centerwin-yes; Managerial Finance_Fall 2017_Section 1 (9:00-9.50 AM) Homework: Homework 8_Chapter 9 Score: 0 of 1 pt P9-7 (similar to) Save Hw Score: 096, 0of9pt Question Help * 20f 5,0 complete) cost of preferred stock Taylor Systems has just issued preferred stock. The stock has aa% annual avidend and a S100 pe ate and assaassoperaensoon n flotation costs of $6.00 per share were paid. Calculate the cost of the preferred stock The cost of the preferred stock is I-%. (Round to two decanal places ) Enter your answer in the answer box and thon click Chock Answer All parts showing To see what to study next, go to your Study Plan Type here to search

Explanation / Answer

Annual dividend=(100*8%)=$8

Hence cost of preferred stock=Annual dividend/(Price-floatation costs)

=$8/(95-6)

=8/89

=8.99%(Approx)

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