Response to the following problem:
The Oxford Company is evaluating its financing strategy. They estimate that they can sell an issue of $50 par value preferred stock that has a dividend rate of 6% (with dividends paid at the end of each year).
a. What is the cost of preferred stock if the they sell the issue at par value with no flotation costs?
b. What is the all-in-cost of preferred stock if they sell the issue at par value with flotation costs of $3 per share?
c. What is the all-in-cost of preferred stock if they sell the issue at par value with flotation costs of 1% of par value?
d. What is the cost of preferred stock if they sell the issue at $52 per share and incur no flotation costs?
e. What is the all-in-cost of preferred stock if they sell the issue at $52 per share and incur flotation costs of $1 per share?