Annual dividend=49*8%=$3.92
Hence cost of preferred stock=Annual dividend/(Current price*(1-Flotation cost)
=3.92/(40*(1-0.14)
=3.92/34.4
=11.4%(Approx).
Problem 13-15 A few years ago, Hendersen Corp. issued preferred stock paying 8% of its par...
A few years ago, Hendersen Corp. issued preferred stock paying 8% of its par value of $46. The issue is currently selling for $36. Preferred stock flotation costs are 10% of the proceeds of the sale. What is Hendersen's cost of preferred stock? Round the answer to two decimal places.
Wallace Container Company issued $100 par value preferred stock 10 years ago. The stock provided a 5 percent yield at the time of issue. The preferred stock is now selling for $76. What is the current yield or cost of the preferred stock? (Disregard flotation costs.) (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
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Cost of Preferred Stock with Flotation Costs Burnwood Tech plans to issue some $60 par preferred stock with a 6% dividend. A similar stock is selling on the market for $61. Burnwood must pay flotation costs of 5% of the issue price. What is the cost of the preferred stock? Round your answer to two decimal places.
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