Billy's Goat Coats has a preferred share issue outstanding with a current price of $38.89. The firm last paid a dividend on the issue of $3.50 per share. What is the firm's cost of preferred equity? Round your final answer to nearest percentage.

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Quizplus · Accepted Answer

The cost of preferred equity is calculated by dividing the annual dividend by the current price of the preferred shares. Here, $3.50 / $38.89 = 0.0899, which is approximately 9%.

Billy's Goat Coats Has a Preferred Share Issue Outstanding with a Current