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eBook Torch Industries can issue perpetual preferred stock at a price of $59.50 a share. The...

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Torch Industries can issue perpetual preferred stock at a price of $59.50 a share. The stock would pay a constant annual dividend of $5.00 a share. What is the company's cost of preferred stock, rp? Round your answer to two decimal places.

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Answer #1

Ans 8.40%

company's cost of preferred stock   = annual dividend / price of preferred stock *10

                                                         = 5 / 59.50 * 100

                                                         = 8.40%

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