Question
Warnock Corporation is estimating its cost of preferred stock. It has outstanding a $100 face value issue that pays a $9 annual dividend and is
Warnock Corporation is estimating its cost of preferred stock. It has outstanding a $100 face value issue that pays a $9 annual dividend and is currently selling for $85.00. Warnock would pay a 7% (based on market value) flotation cost to issue new preferred stock and is in the 25% marginal tax bracket.
Determine the preferred stock investors' required rate of return.
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Intermediate Financial Management
Authors: Eugene F Brigham, Phillip R Daves
14th Edition
0357516664, 978-0357516669
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