Calculate the cost of issuing preferred shares

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1. A company can issue preferred shares of stock at $90 per share; and pay an 8% dividend. The stock brokerage firm charges $5 per share to issue the stock. Calculate the cost of issuing preferred shares?

2. The Downhill Co. just paid its annual dividend of $4.70 per share. It has been reducing the dividends by 12.8 percent each year. What is the maximum you should be willing to pay today to purchase this company's stock if you require a 15 percent rate of return?

Reference no: EM131990459

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