A Firm Has $2 Million Market Value and It Sells

question 10

Multiple Choice

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

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

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