A company has preferred stock outstanding. It issued the shares at $100 per share 3 years ago. The preferred shares pay a fixed annual dividend of $9.60 per share (expect dividends to be paid forever). The preferred stock traded today at $120 per share. What is the current cost (in percentage terms) of preferred stock if we were to use it in a WACC calculation? 8.0% 34% 6.6% 9.6%

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A company has preferred stock outstanding.  It issued the shares at $100 per share 3 years ago.  The preferred shares pay a fixed annual dividend of $9.60 per share (expect dividends to be paid forever).  The preferred stock traded today at $120 per share.  What is the current cost (in percentage terms) of preferred stock if we were to use it in a WACC calculation? 

A company has preferred stock outstanding. It issued the shares at $100 per share 3
years ago. The preferred shares pay a fixed annual dividend of $9.60 per share
(expect dividends to be paid forever). The preferred stock traded today at $120 per
share. What is the current cost (in percentage terms) of preferred stock if we were
to use it in a WACC calculation?
8.0%
34%
6.6%
9.6%
Transcribed Image Text:A company has preferred stock outstanding. It issued the shares at $100 per share 3 years ago. The preferred shares pay a fixed annual dividend of $9.60 per share (expect dividends to be paid forever). The preferred stock traded today at $120 per share. What is the current cost (in percentage terms) of preferred stock if we were to use it in a WACC calculation? 8.0% 34% 6.6% 9.6%
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