Holdup Bank has an issue of preferred stock with a $8 stated dividend that just sold...

Holdup Bank has an issue of preferred stock with a $8 stated dividend that just sold for $89 per share. What is the bank's cost of preferred stock?

Options:

8.00%

9.35%

9.44%

8.63%

8.99%

Expert Solution

Cost of preferred stock	Annual dividend÷Stock price

Here,
Annual dividend	$ 8
Preferred stock price	$ 89

Cost of preferred stock	8.99%
	8÷89

jeff jeffy answered 2 years ago

Holdup Bank has an issue of preferred stock with a stated dividend of $7 that just...

Holdup Bank has an issue of preferred stock with a stated dividend of $7 that just sold for $87 per share. What is the bank’s cost of preferred ?

Suppose a company has a preferred stock issue and a common stock issue. Both have just...

Suppose a company has a preferred stock issue and a common stock issue. Both have just paid a $2 dividend. Which do you think will have a higher price, a share of the preferred or a share of the common? Evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long-term profits. What are the difficulties of using the PE ratio to...

1) Bank of America has a preferred stock dividend of $3.76. The stock is trading for...

1) Bank of America has a preferred stock dividend of $3.76. The stock is trading for $62.66. What is the expected return of the preferred stock? 2) A company had free cash flows of $370 million last year. Free cash flows are expected to grow at 2.4% per year. The WACC for the firm is 7.1%. They currently have $7.9 billion in debt outstanding, and have 189 million common stock outstanding. The company does not have any preferred stock. What...

Taylor Systems has just issued preferred stock. The stock has a 9 % annual dividend and...

Taylor Systems has just issued preferred stock. The stock has a 9 % annual dividend and a $ 75 par value and was sold at $72.00 per share. In addition, flotation costs of $6.00 per share were paid. Calculate the cost of the preferred stock.

ABC Corp. just issued some new preferred stock. The issue will pay a $3 quarterly dividend...

ABC Corp. just issued some new preferred stock. The issue will pay a $3 quarterly dividend in perpetuity, begining 12 years from now. If the market requires a 8% return on this investment, how much does a share of preferred stock cost today? Suppose that you buy a semi-annual coupon bond with coupon rate of 10%; the market price of $1,120, and the time to maturity of 17 years. Seven years from now, the YTM on your bond is expected...

Carby Hardware has an outstanding issue of perpetual preferred stock with an annual dividend of $8.40...

Carby Hardware has an outstanding issue of perpetual preferred stock with an annual dividend of $8.40 per share. If the required return on this preferred stock is 6.5%, at what price should the preferred stock sell? Select the correct answer. a. $131.30 b. $129.92 c. $130.61 d. $129.23 e. $128.54

Meteora, Inc., has an issue of preferred stock outstanding that pays a dividend of $4.35 every...

Meteora, Inc., has an issue of preferred stock outstanding that pays a dividend of $4.35 every year, in perpetuity. This issue currently sells for $95 per share. What is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

National Health Corporation (NHC) has a cumulative preferred stock issue outstanding, which has a stated annual...

National Health Corporation (NHC) has a cumulative preferred stock issue outstanding, which has a stated annual dividend of $10 per share. The company has been losing money and has not paid preferred dividends for the last five years. There are 510,000 shares of preferred stock outstanding and 810,000 shares of common stock. a. How much is the company behind in preferred dividends? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g. $1,234,000).) Preferred dividends in...

Enterprise Storage Company has 600,000 shares of cumulative preferred stock outstanding, which has a stated dividend...

Enterprise Storage Company has 600,000 shares of cumulative preferred stock outstanding, which has a stated dividend of $6.65. It is six years in arrears in its dividend payments. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. How much in total dollars is the company behind in its payments? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g., $1,234,000).) b. The firm proposes to offer...

Enterprise Storage Company has 550,000 shares of cumulative preferred stock outstanding, which has a stated dividend...

Enterprise Storage Company has 550,000 shares of cumulative preferred stock outstanding, which has a stated dividend of $8.75. It is six years in arrears in its dividend payments. Use Appendix B for an approximate answer but calculate your final answer using the formula and financial calculator methods. a. How much in total dollars is the company behind in its payments? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g., $1,234,000).) b. The firm proposes to offer...

Question