Question
Asked Apr 29, 2019
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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?

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Expert Answer

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 =...

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