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Accounting

3. Rocky Mountain Travel Incorporated plans to issue preferred stock at a price of $50 per share. The dividend will be $430 per share, and issuance costs are expected to be $3.00 per share. What is the cost to Rocky Mountain Travel of raising funds with preferred stock? 
 

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Given,

Price of preferred stock= $50

Price of dividend= $4.30

Issuance of cost= $3

So,

Cost = 4.30/ (50* (1- 3/ 50))

= 9.15%

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