XYZ Corporation Is Trying to Determine the Appropriate Cost of Preference

question 64

Multiple Choice

XYZ Corporation is trying to determine the appropriate cost of preference shares to use in determining the firm's cost of capital.This firm's preference shares are currently selling for $29.89 per shares and pay a perpetual annual dividend of $2.60 per share.Compute the cost of preference shares for XYZ.

• A)7.2%
• B)6.2%
• C)8.7%
• D)16.7%

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Definitions:

Cost Recovery Deduction

A tax deduction that allows taxpayers to recover the cost of an asset over the time the asset is used, typically through depreciation.

Cost Recovery Deduction

A tax deduction that allows a taxpayer to recover the cost of property or assets over time through depreciation.

Warehouse

A large commercial building for storing goods. Warehouses are used by manufacturers, importers, exporters, wholesalers, transport businesses, customs, etc.

Land Valuation

The process of determining the present worth of a piece of land based on its highest and best use, market conditions, and other factors.