Estimating Cost of Preferred Equity Capital and WACC The consolidated balance sheets of Dow Chemical show that the company has 4,000,000 shares of preferred stock outstanding at the end of 2015. That preferred stock has a book value of $1,000 per share.

During fiscal 2015, the company declared $340 million in dividends for its preferred stock.

Required

????????????Compute the total book value of its preferred stock at the end of 2015.

????????????Estimate the cost of preferred equity capital, r pe .

c????????Explain how to incorporate the cost of preferred equity capital into the estimation of the weighted average cost of capital. (No computations are required.)