Question - On 10 June, 2017, Hood Ltd had an issue of preference shares that traded at $75 a share. If the face value of the shares was $100 per share and the dividend is $6.00.
REQUIRED:
i) Calculate Hood Ltd's cost of preference shares.
ii) If the cost of debt is the same as in i) above, would you recommend that the company use debt or preference shares to raise additional capital? Give reasons.