Torch Industries can issue perpetual preferred stock at a price of $63

Finance Dec 24, 2020

Torch Industries can issue perpetual preferred stock at a price of $63.00 a share. The stock would pay a constant annual dividend of $5.50 a share. What is the company's cost of preferred stock, ro7 Round your answer to two decimal places.

Expert Solution

Cost of preference shares=

preference dividend ÷ preferred stock price

=$5.5/$63=8.73%

cost of preferred stock=8.73%

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