In: Finance
Your firm's preferred stock pays a dividend of $3.30 per year. The current price of the preferred stock is $21.50. Your firm's tax rate is 35%. What is your firm's cost of preferred stock?
Cost of Preferred Stock = Dividend per share / Price of Preferred stock
= $3.30 / $21.50
Cost of Preferred Stock = 0.1535 or 15.35%