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(Cost of preferred stock) The preferred stock of Gator Industries sells for % 34.77 and pays $2.73 per year in dividends. What is the cost of preferred stock financing? IF Gator were to issue 490,000 more preferred shares just like the ones it currently has outstanding, it could sell them for $34.77 a share but would incur floatation costs of $3.09 per share.
1. What is the floatation costs adjusted initial outlay for issuing the preferred shares? (Round to the nearest dollar)
You take out an installment loan to purchase a time-share costing $18,000. You make a down payment of $2,700 and finance the balance by making monthly payments of $762 for 24 months. Use Table 13-1 from your text to find the APR.
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Your firm is planning to issue preferred stock. The stock is expected to sell for $98.91 a share and will have a $100 par value on which the firm will pay a 14.3% dividend. What is the cost of capital to the firm for the preferred stock?
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