What is the cost of a $100 par preferred with a 5% flotation cost that pays...

Question

Question

What is the cost of a $100 par preferred with a 5% flotation cost that pays 9%?

Answer 1

Answer #1

Cost of a preferred stock = $9 / [$100(1 - 0.05)]

Cost of a preferred stock = 0.0947 or 9.47%

Answer 2

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