Perpetual preferred stock from Franklin Inc. sells for $97.50 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?

cost of preferred stock   = 9.08%

Explanation:

given data

sells = $97.50 per share

pays annual dividend =  $8.50

flotation cost = 4.00% of price paid

solution

we get her  cost of preferred stock that is express as

cost of preferred stock  =    .......................1

put here value and we will get

cost of preferred stock   =

cost of preferred stock   =  

cost of preferred stock   = 9.08%

a.   is the correct choice.

good luck. : )

1. c

2. b

3. a

4. c

5. a

6. b

7. c

8. c

9.b

10. d

just took it 100%