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Compute what is the company cost of preferred stock for use

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Problem 1: Perpetual preferred stock from Franklin Inc. sells for $97.50 per share, and it pays an $8.50 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 4.00% of the price paid by investors. What is the company's cost of preferred stock for use in calculating the WACC?

a. 8.72%
b. 9.08%
c. 10.22%
d. 9.82%
e. 9.44%

Reference no: EM132959907

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