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Thoms Atlantics 12 percent annual coupon bonds mature in 10 years and sell for $1,000. The firm is selling, at par, $100 preferred stock, which
Thoms Atlantics 12 percent annual coupon bonds mature in 10 years and sell for $1,000. The firm is selling, at par, $100 preferred stock, which pays 6.51% of par annual dividend, and flotation costs are 7 percent. Thoms Atlantic's beta is 1.2, the risk-free rate is 10 percent, and the market risk premium is 5 percent. What is Thoms Atlantic's cost of newly issued preferred stock?
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