Testbank, Question 31 James Water Park Company’s preferred shares pay an annual dividend of $3.00 per...

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Testbank, Question 31 James Water Park Company’s preferred shares pay an annual dividend of $3.00 per...

Testbank, Question 31 James Water Park Company’s preferred shares pay an annual dividend of $3.00 per share. What is the cost of preferred stock if the current price is $80 per share and after-tax flotation costs are $6 per share? 4.05% 3.75% 7.50% 7.79%

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Answer 1

Answer #1

A. 4.05%

Cost of preferred stock = $3.00 / ($80 - $6)

Cost of preferred stock = 0.0405 or 4.05%

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Answer 2

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Testbank, Question 31 James Water Park Company’s preferred shares pay an annual dividend of $3.00 per...

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