Donnelly and Son pay $8 as the annual dividend on their preferred stock. Currently, this stock is selling for $72 a share. What is Donnelly's cost of preferred stock?

Name: Donnelly and Son pay $8 as the annual dividend on their preferred stock. Currently, this stock is selling for $72 a share. What is Donnelly's cost of preferred stock?
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Question

Quizplus · Accepted Answer

The cost of preferred stock is calculated by dividing the annual dividend by the current price per share. So, $8 / $72 = 0.1111 or 11.11%.

Donnelly and Son Pay $8 as the Annual Dividend on Their