P97 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?

P9-7 Cost of preferred stock Taylor Systerns 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