10 years ago, Acme Corporation issued preferred stock at $100 per share with a promised annual dividend of $5. Today, the market price of Acme's preferred share is $120. What is Acme's cost of preferred stock? 6.48% 20.00% 16.67% 4.17% 5.00%
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Dividend Yield = Annual Dividend / Market Price of Preferred Stock Annual Dividend = $5 Market Price of Preferred Stock = $120 Dividend Yield = $5 / $120 = 0.0417 or 4.17% Show more…
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