Preference shares of Dunmovin pay a dividend of $3.5 each year and trade at a price of $25. What is the cost of preference share capital for Dunmovin?

Name: Preference shares of Dunmovin pay a dividend of $3.5 each year and trade at a price of $25. What is the cost of preference share capital for Dunmovin?
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Quizplus · Accepted Answer

The cost of preference share capital is calculated as the annual dividend divided by the current price of the share. So, $3.5 / $25 = 0.14 or 14.0%.

Preference Shares of Dunmovin Pay a Dividend of $3