The cost of equity for the company must take the cost of preference share (if any has been issued) that the company has outstanding into account.

Question

Quizplus · Accepted Answer

The cost of equity calculation considers all sources of financing, including preference shares (if any). Preference shares are considered as a form of equity financing and their cost is included in the calculation of the overall cost of equity for the company. Therefore, it is true that the cost of equity for the company must take the cost of preference share (if any has been issued) into account.

The Cost of Equity for the Company Must Take the Cost