sotaom/Student/Player Test.aspx?testld-1683014028&centerwin-yes; Managerial Fina

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sotaom/Student/Player Test.aspx?testld-1683014028&centerwin-yes; Managerial Finance Fal 2017_Section 1 (9:00-9:50 AM) Quiz: Quiz #4 Submit Quiz This Question: 1 pt 120f 15(O complete) 1 > This Quiz: 20 pts possible stock. The stock has a 9% annual dvidend and asso par value and was sold at S4600 per share. In addition, notation Cost of preferred stock Tayor y terms costs of $3.00 per share were paid. Calculate the cost of the preferred stock haspust issued preferred The cost of the preferred stock is% (Round to two decimal places.) Enter your answer in the answer borx This course (Managerial Finance Fall 2017 Section 1 (9:00-9.50 AM) is based on Gitman/Zutter Principles of Managerial Finance BRIEF 7e Type here to search

Explanation / Answer

Ans ) Annual dividend = 9%

Par value = $50

Annual dividend = 9%*50 = $4.5

Cost of preferred stock = Annual dividend / (Stock price - Flotation cost)

= $4.5 / ($46 - $3)

= $4.5 / $43

= 10.47%

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