Answer to Question #332108 in Finance for niti

Question

Mavis Taylor Corporation has just issued preferred stock. The stock has a 6% annual dividend and a $100 par

value and was sold at $98.5 per share. Flotation costs were an additional $3 per share.

a. Calculate the cost of the preferred stock.

b. If the firm sells the preferred stock with a 10% annual dividend and net $93.00 after flotation costs, what is its

cost?

Answer 1

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