A firm's cost of preferred stock is equal to the preferred dividend divided by the net price after flotation costs K_p = (D_p/P_o - F).

Name: A firm's cost of preferred stock is equal to the preferred dividend divided by the net price after flotation costs K p = (D p /P o - F).
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Question

Quizplus · Accepted Answer

This formula is correct and used to calculate the cost of preferred stock, where DS is the preferred dividend, PS is the net price (or proceeds) after flotation costs, and F is the flotation costs.

A Firm's Cost of Preferred Stock Is Equal to the Preferred