Company's Perpetual Preferred Stock Currently Sells for $92

question 54

Multiple Choice

company's perpetual preferred stock currently sells for $92.50 per share, and it pays an $8.00 annual dividend If the company were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the issue price What is the firm's cost of preferred stock?

• A) 7.81%
• B) 8.22%
• C) 8.65%
• D) 9.10%
• E) 9.56%

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Definitions:

Emotionally Stable

The characteristic of being able to remain calm, composed, and untroubled by stress or change.

Personality

The combination of emotional, attitudinal, and behavioral response patterns of an individual.

Limit Choices

Refers to reducing the number of options available to make a decision easier or to focus on more viable alternatives.

Constant

Something that remains unchanged or stable over a period of time.