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Social ScienceBethesda 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?
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?
Expert Answer
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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