Given the following data: estimated selling price per preferred share- P 50; preferred share par value...
Given the following data: estimated selling price per preferred share- P 50; preferred share par value – P 50; quarterly dividend estimated to be paid – P 1.20; flotation cost – 25% of par value.
Compute for the net proceeds from the sale of the preferred share.
Answer:PAnswer
Calculate the cost of preferred share.
Answer:Answer
%
Homework Answers
Solution:
Proceed from the sale of preferred share = selling price - flotation cost = P 50 - P50 * 25% = P 37.50
Cost of preferred stock = dividend per share / net proceed per share
Cost of preferred stock = P 1.20 / P 37.50
Cost of preferred stock = 3.20%
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