Problem 2: Cost of Preferred Stock ABC currently has no preferred stock, but is planning on issuing some. To determine what dividend the preferred stock would require, ABC's investment bankers have presented it with information on four of ABC's competitors, as shown below. a Calculate the required rate of return on each of ABC's competitor's preferred stock. b. ABC's investment bankers estimated that it could issue new, $100 preferred stock to sell at par, with 5% flotation costs. Given the required rate of return of each competitor, what is ABC's cost of preferred stock for comparable issues? Stock A B D Par $100 S60 $50 $40 Sale Price Annual Dividend $103 12% S55 10% $55 $6.00 $36 10% Problem 3: Cost of Common Stock - CAPM