Burnwood Tech plans to issue some $127 par preferred stock with a 12% dividend. A similar...
Burnwood Tech plans to issue some $127 par preferred stock with a 12% dividend. A similar stock is selling on the market for $145. Burnwood must pay flotation costs of 2% of the issue price. What is the cost of the preferred stock?
Homework Answers
| cost of preferred equity |
| cost of preferred equity = Preferred dividend/price*(1-flotation %)*100 |
| cost of preferred equity = 12/(127*(1-0.02))*100 |
| =9.64 |
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