Cost for carlton irredeemable preference share

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Reference no: EM131873351

Carlton Investment Ltd has issued preference shares. On that date the preference share price was $2.05, the annual dividend was $0.14. Calculate the cost for Carlton’s irredeemable preference share.

a. The cost for Carlton’s irredeemable preference share is 6.83% per annum.

b. The cost for Carlton’s irredeemable preference share is 14.64% per annum.

c. None of the other answers are true.

d. The cost for Carlton’s irredeemable preference share is 28.7% per annum.

Kpref = d/p0

d = preference dividend

P0 = market value of preference shares

all the answers says .... .14/2.05

but its p/d ... making it 2.05/.14?

Reference no: EM131873351

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