Evaluating the cost of preferred stock


Calculate the cost of preferred stock (rPS) for each of the following:

Preferred Stock Par Value Current Price (Po) Flotation Cost Annual Dividend

(% of Par)

A $100 $101 $9.00 11%

B $40 $38 $3.50 8%

C $35 $37 $4.00 $5.00

D $30 $26 5% of par $3.00

E $20 $20 $2.50 9%

please do in word not excel

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Finance Basics: Evaluating the cost of preferred stock
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