A Firm Has Determined It Can Issue Preferred Stock at $115

question 111

Multiple Choice

A firm has determined it can issue preferred stock at $115 per share par value. The stock will pay a$12 annual dividend. The cost of issuing and selling the stock is $3 per share. The cost of thepreferred stock is

• A) 10.4 percent.
• B) 10.7 percent.
• C) 12 percent.
• D) 6.4 percent.

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