# Bethesda Water has an issue of preferred stock outstanding with a coupon rate of 3.80 percent that sells for \$89.57 per share. If the par value is \$100, what is the cost of the company's preferred stock?

Question
22 views

Bethesda Water has an issue of preferred stock outstanding with a coupon rate of 3.80 percent that sells for \$89.57 per share. If the par value is \$100, what is the cost of the company's preferred stock?

check_circle

Step 1

Calculation of the cost of preferred stock of the company. We have,

Cost of preferred stock = Annual dividend on preferred stock / Current selling price of preferred stock

Here,

Annual dividend on preferred stock = Par value of preferred stock x Annual coupon rate

Annual dividend on preferred stock =...

### Want to see the full answer?

See Solution

#### Want to see this answer and more?

Solutions are written by subject experts who are available 24/7. Questions are typically answered within 1 hour.*

See Solution
*Response times may vary by subject and question.
Tagged in