A Firm Has $1 Million Market Value and It Sells

question 8

Multiple Choice

A firm has $1 million market value and it sells preference shares for $100 per share. If the annual dividend on the preference share is $7 and it trades at $95, what is the cost of preference share capital?

• A) 7.15%
• B) 7.21%
• C) 7.37%
• D) 6.75%

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Definitions:

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