Preference shares of Dunmovin pay a dividend of $4 each year and trade at a price of $30. What is the cost of preference share capital for Dunmovin?

Question

Quizplus · Accepted Answer

The cost of preference share capital can be calculated by dividing the dividend by the market price. Therefore, the cost of preference share capital for Dunmovin is 4/30 = 0.133 or 13.3%. The answer is B.

Preference Shares of Dunmovin Pay a Dividend of $4 Each