Arizona State University FIN FIN 40720 (Computing the cost of preferredstock) In the spring of 2017 the…
(Computing the cost of preferred stock) In the spring of 2017 the Marrion Metal Shaping Company was planning on issuing preferred stock to help finance a major plant expansion. Your firm is planning to issue preferred stock. The stock is expected to sell for $97.48 a share and will have a $100 par value on which the firm will pay a 10.3 percent dividend. What is the cost of capital to the firm for the preferred stock?
The firm’s cost of capital for the preferred stock is
%. (Round to two decimal places.)
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