what is the money an investor receives above and beyond the money initially invested called?a) saving.b)liquidity.c)return.d)inv
2 answers:
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Answer:
Cost of preferred stock = 12%
correct option is A. 12 percent
Explanation:
given data
preferred stock = $125 per share
annual dividend = $15
cost of issuing and selling = $4 per share
to find out
cost of the preferred stock
solution
we know that Cost of preferred stock is express as
Cost of preferred stock = Annual dividend ÷ (Stock price-Flotation cost) ...........................1
and we know Flotation cost will be here = = 3.20 %
so
from equation 1 we get
Cost of preferred stock = Annual dividend ÷ (Stock price-Flotation cost)
Cost of preferred stock = $15 ÷ ($125 - 3.20 % )
Cost of preferred stock = 0.120030
Cost of preferred stock = 12%
correct option is A. 12 percent