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Introduction of the term Cost of preference shares

Give a brief introduction of the term Cost of preference shares?

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Costs of preference share are as well employed to compute the cost of capital and are the fixed cost bearing securities. Within this the rate of dividend is fixed in advance when they are issued. It is equivalent to the ratio of annual dividend income per shares to net keep on. It is not employed for taxes and it must not be adjusted for the same. Essentially it is bigger than the cost of debt.

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