Sandhill Luxury Liners has preferred shares outstanding that pay an annual dividend equal to $20 per...

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Sandhill Luxury Liners has preferred shares outstanding that pay an annual dividend equal to $20 per...

Sandhill Luxury Liners has preferred shares outstanding that pay an annual dividend equal to $20 per year. If the current price of Sandhill preferred shares is $80.00, what is the after-tax cost of preferred stock for Sandhill?

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Answer 1

Answer #1

After tax cost of preferred stock = (Annual dividend / share price) * 100

After tax cost of preferred stock = (20 / 80) * 100

After tax cost of preferred stock = 25.00%

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Answer 2

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