Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Travis Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $93.00, but flotation costs will be 7% of the market price, so the net price will be $86.49 per share. What is the cost of the preferred stock, including flotation? Round your answer to two decimal places.
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- Stout Inc.'s perpetual preferred stock sells for $65.00 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC? a. 10.39% b. 13.62% c. 14.40% d. 14.28% e. 11.81%arrow_forward7) see picarrow_forwardTorch Industries can issue perpetual preferred stock at a price of $53.00 a share. The stock would pay a constant annual dividend of $5.50 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places. %arrow_forward
- ILK has preferred stock selling for 95 percent of par that pays an annual coupon of 6 percent.What would be ILK’s component cost of preferred stock? (Round your answer to 2 decimal places.)arrow_forwardTravis Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $89.00, but flotation costs will be 8% of the market price, so the net price will be $81.88 per share. What is the cost of the preferred stock, including flotation? Round your answer to two decimal places.arrow_forward(Preferred stock valuation) Kendra Corporation's preferred shares are trading for $42 in the market and pay a $3.80 annual dividend. Assume that the market's required yield is 11 percent. a. What is the stock's value to you, the investor? b. Should you purchase the stock? a. The value of the stock to you, the investor, is $ per share. (Round to the nearest cent.)arrow_forward
- Torch Industries can issue perpetual preferred stock at a price of $72.00 a share. The stock would pay a constant annual dividend of $7.00 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places. %arrow_forwardE-Éyes.com has a new issue of preferred stock it calls 20/20 preferred. The stock will pay a $20 dividend per year, but the first dividend will not be paid until 20 years from today. If you require a return of 7.5 percent on this stock, how much should you pay today? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Current stock pricearrow_forwardMullen Inc. has an outstanding issue of perpetual preferred stock with an annual dividend of $2.10 per share. If the required return on this preferred stock is 6.5%, at what price should the stock sell? Your answer should be between 18.12 and 72.80, rounded to 2 decimal places, with no special characters.arrow_forward
- Torch Industries can issue perpetual preferred stock at a price of $73.50 a share. The stock would pay a constant annual dividend of $6.00 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places. %arrow_forwardевоок Torch Industries can issue perpetual preferred stock at a price of $61.00 a share. The stock would pay a constant annual dividend of $4.50 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places. %arrow_forward9arrow_forward
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