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ment: Week 5 Homework Assignment Score: 0.00% Save Submit Assignment for Grading ions Problem 10.14 s Question 2 of 8 Check My Work (3 remaining) O 10-4: Cost of Preferred Stock, rp Cost of Preferred Stock Including Flotation Trivoli Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently O-selling for $112.50, but flotation costs will be 7% of the market price, so the net price will be $104.63 oper share. What is the cost of the preferred stock, including flotation? Round your answer to two decima places. Check My Work (3 remaining) Icon Key

Explanation / Answer

Annual dividend = $11

Selling price (Net of flotation cost) = $104.63

Cost of preferred stock = Annual dividend/Selling price (net of flotation cost)

Cost of preferred stock = $11/$104.63 = 0.1051 = 10.51%

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