Please help I am taking a final right now Jurgen Vandersly i

Please help I am taking a final right now:

Jurgen Vandersly is CFO of Yurii Corp and needs to find the cost of preferred capital. The preferred stock h?s a dividend of $0.31. Today, the shares sell for capital for Yurii ? Yuri is in the 50% tax bracket. the shares sell for $4.25 each. What is the appropriate cost of preferred equity o 5.5% 7.29% 2.75% o 3.6%

Solution

Answer:7.29%

Cost of preferred Stock = Annual Dividend on preferred stock / Current Market price of preferred stock

Cost of preferred Stock = $0.31 / $4.25 = 0.0729 or 7.29%