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Please show math. Holdup Bank has an issue of preferred stock with a $8 stated dividend that just sold for $86 per share. What is
Please show math.
Holdup Bank has an issue of preferred stock with a $8 stated dividend that just sold for $86 per share. What is the bank's cost of preferred stock? Hint: The price of any asset is the present value of future cash flows. The preferred stock has a constant dividend, and is a perpetuity. Use the present value equation for a perpetuity to figure out the required return on the preferred stock.
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