Bostwick Company's perpetual preferred stock sells for $85 per share, and it pays an $7.30 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the weighted average cost of capital (WACC)? Your answer should be between 7.20 and 11.52, rounded to 2 decimal places, with no special characters.
Bostwick Company's perpetual preferred stock sells for $85 per share, and it pays an $7.30 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the weighted average cost of capital (WACC)? Your answer should be between 7.20 and 11.52, rounded to 2 decimal places, with no special characters.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter8: Basic Stock Valuation
Section: Chapter Questions
Problem 4P
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Transcribed Image Text:Bostwick Company's perpetual preferred stock sells for $85 per share, and it pays an $7.30 annual dividend.
If the company were to sell a new preferred issue, it would incur a flotation cost of 4% of the price paid by
investors. What is the company's cost of preferred stock for use in calculating the weighted average cost of
capital (WACC)?
Your answer should be between 7.20 and 11.52, rounded to 2 decimal places, with no special characters.
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