Question

Cost of Preferred Stock Torch Industries can issue perpetual preferred stock at a price of $57.00 a share. The stock would pay a constant annual dividend of $6.00 a share. What is the company’s cost of preferred stock, ?

Answer 1

Answer:

the company’s cost of preferred stock is 10.53%.

Explanation:

given information:

perpetual preferred stock = $57.00

a constant annual dividend = $6.00

to determine the company’s cost of preferred stock we can use the following formula

$cost of preferred stock = \frac{ annual dividend}{preferred stock}$

                                   $= \frac{6.00}{57.00}$

                                   $=10.53$%

therefore, the company’s cost of preferred stock is 10.53%.