Question
Cost of preferred stock Taylor Systems has just issued preferred stock. The stock has an 8% annual dividend and a $100 par value and was
Cost of preferred stock Taylor Systems has just issued preferred stock. The stock has an 8% annual dividend and a $100 par value and was sold at $99.50 per share. In addition, flotation costs of $1.50 per share must be paid.
a. Calculate the cost of the preferred stock.
b. If the firm sells the preferred stock with a 10% annual dividend and nets $90.00 after flotation costs, what is its cost
c. Using the constant-growth valuation model, determine the required return on the companys stock, rs, which should equal the cost of retained earnings, rr
d. Using the constant-growth valuation model, determine the cost of new common stock?
I KNOW THE ANSWERS FOR A AN B just not sure with numbers to plug into the required return formula.or how to determine the cost of new common stock.
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