Anderson systems has just issued preferred stock.  The stock has a 15% annual dividend and $100 par value and was sold at $125 par share.  In addition, flotation cost of $15 par share must be paid.   1.           Calculate the cost of preferred stock.   2. Explain two (2) disadvantages of discounted cashflow analysis.

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Chapter12: Investing In Stocks And Bonds
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Anderson systems has just issued preferred stock.  The stock has a 15% annual dividend and $100 par value and was sold at $125 par share.  In addition, flotation cost of $15 par share must be paid.

 

1.           Calculate the cost of preferred stock.

 

2. Explain two (2) disadvantages of discounted cashflow analysis.

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