A Firm Has $2 Million Market Value and It Sells

question 44

Multiple Choice

A firm has $2 million market value and it sells preference shares for $100 per share. If the annualdividend on the preference share is $8 and it trades at $90, what is the cost of preference share capital?

• A) 9.35%
• B) 8.89%
• C) 8.75%
• D) 9.21%

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