Preferred stock valuation davis plc has in its share


Question: (Preferred stock valuation) Davis Plc. has in its share capital 100,000, $10 preferred shares paying 12 percent dividends. They are currently trading at $40 per share.

a. Calculate the cost of preference shares.

b. Calculate the price of Davis Plc. preference shares if the cost of preferred shares is 15 percent.

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