Please answer accurately, be clear about what the answer is as well to receive a

Question

Please answer accurately, be clear about what the answer is as well to receive a good review. Thank you!

The Cost of Copital: Cost of Preferred Stock The cost of preferred stock, o used in the weighted aversge cost of capital equation is calculated as the preferreddiidend, Dp, dlivided by the current price of the preferred stock, PpSelecttax adjustment is made when calculating p because preferred dividends Select.tax deductible; sle tax savings are associated with preferred stock. uantitativ. Problem: Barton Industries can issue perpetual prefe red stock at a price of g48 per share. The stock would pay a constant annual dividend of $3.00 per share. If the firm's marginal tax rate is 4 %, what s the company's cost of pre erred stock? Round your answer to 2 decimal places

Explanation / Answer

Price = 48

Dividend = 3

Cost of Preferred Stock = Dividend/ Market Price

Cost of Preferred Stock = 3/48

Cost of Preferred Stock = 6.25%

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