Fern has preferred stock selling for 93.3 percent of par that pays an 9.7 percent annual...

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Fern has preferred stock selling for 93.3 percent of par that pays an 9.7 percent annual...

Fern has preferred stock selling for 93.3 percent of par that pays an 9.7 percent annual coupon (dividend rate). Assume the Par Value of the Preferred stock is $100. What would be Fern's component cost of preferred stock?

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Answer 1

Answer #1

Dividend =9.7%*100 =9.7
Price =Par value*93.3% =100*93.30% =93.30
Cost of Preferred Stock =Dividend /Price =9.7/(93.3%*100) =10.40%

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Answer 2

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