Chapter 13hw60 polnts Ectra Credn 1000 points Pangbourne Whi

Chapter 13-hw-60 polnts (Ectra Credn 10.00 points Pangbourne Whitchurch has preferred stock outstanding. The stock pays a dividend of $16 per share, and sells for $80. What is the percentage cost of the preferred stock? (Enter your anewer as a whole percent) Cost of preferred stock References Worksheet Difficulty Basic

Solution

We have

Cost of Preferred Stock = Annual dividend per share / Current market price

= 16 / 80

Cost of Preferred Stock = .2

Cost of Preferred Stock (as a percent) = 20