The cost of preferred stock is computed the same as the:

a. pre-tax cost of debt.

b. return on an annuity.

c. aftertax cost of debt.

d. return on a perpetuity.

e. cost of an irregular growth common stock

Question

Business

Hector Cole

13 June, 17:20

The cost of preferred stock is computed the same as the:

a. pre-tax cost of debt.

b. return on an annuity.

c. aftertax cost of debt.

d. return on a perpetuity.

e. cost of an irregular growth common stock

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Answers (1)

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Pennington · Answer 1

d. return on a perpetuity

Explanation:

Two types of stock are common and preferred. Preferred stockholders do not have voting rights but they have a higher claim to earnings and assets as compared to the common stockholders. In the case of preferred stock, a fixed annual dividend is obtained forever. So, the cost of preferred stock is computed the same as the return on a perpetuity

The cost of preferred stock is computed the same as the:a. pre-tax cost of debt.b. return on an annuity.c. aftertax cost of debt.d. return on a perpetuity.e. cost of an irregular growth common stock

The cost of preferred stock is computed the same as the:

a. pre-tax cost of debt.

b. return on an annuity.

c. aftertax cost of debt.

d. return on a perpetuity.

e. cost of an irregular growth common stock