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22 March, 22:44

You want to estimate Cardinal Co.'s cost of preferred capital. Assume that the preferred shares were issued at $20/share. Today, the price is $22/share. The preferred shares pay an annual dividend of $2. What is the cost of preferred capital?

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  1. 22 March, 23:12
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    10%

    Explanation:

    Cost of preferred capital=dividend per share/Par value of preferred capital

    =$2/$20=10%

    We take issue price of preferred stock for the sake of working cost of capital.
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Home » Business » You want to estimate Cardinal Co.'s cost of preferred capital. Assume that the preferred shares were issued at $20/share. Today, the price is $22/share. The preferred shares pay an annual dividend of $2. What is the cost of preferred capital?
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