Donati Company's preferred stock sells for $86.00 per share, and it pays an $9.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 3.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?

12.29%

12.05%

11.68%

11.39%

11.87%

answers

watching

views

For unlimited access to Homework Help, a Homework+ subscription is required.

Liked by tashauan

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

Keith LeannonLv2

9 Jun 2019

Unlock all answers

Get 1 free homework help answer.

Get unlimited access

Already have an account? Log in

Read by 1 person

You have 0 free answers left.
Get unlimited access to 3.8 million step-by-step answers.

Get unlimited access

Already have an account? Log in

homeworkwriter99Lv4

4 Aug 2022

Get unlimited access

Already have an account? Log in

Related questions

a company's perpetual preferred stock currently sells for 92.50 per share and it pays an 8.00 annual d dividend. if if the commpany were to sell a new p preferred issue, it would incure a floationa cost of 5.00 what is the preferred cost?

Please show your calculations for every problem,

6. L$M has target capital structure of 50% common stock, 30% debt and 20% preferred stock. The company wishes to issue new 25 years bond with 11% coupon rate. The flotation cost will be $15 and the bond has to be sold at 5% premium. To issue new preferred stock the company has to pay $1.5 as flotation cost. The market value of preferred stock is $10 and the stock will pay $1.5 dollar dividend. New common stock will cost the company $2.5. The last dividend was $2.8 and the market value is $17. Tax rate is 40%. What is the company

yellowhedgehog184

Jones Design wishes to estimate the value of its outstanding preferred stock. The preferred issue has $80 par value and pays an annual dividend of $6.40 per share. Similar-risk preferred stocks are currently earning a 9.3% annual rate of return. A) What is the market value of the outstanding preferred stock? B) If an investor purchases the preferred stock at the value calculated in part a, how much does she gain or lose per share if she sells the stock when the required return on similar-risk preferred stocks has risen to 10.5%? Explain.

maroonprairie-dog173

Weekly leaderboard

Home

Homework Help 3,900,000

Finance 370,000