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Given the following, decide if debt, preferred stock, or common stock should be used.
a. Cost of Debt=10%
b. Tax Rate=35%
c. Dividend (both preferred and Common)=2
d. Price of preferred stock=50
e. Cost of selling preferred stock=$2
f. Risk free rate=5%
g. Beta=1.15
h. Market Return=9%
Several years ago, Rolen Riders issued preferred stock with a stated annual dividend of 11% of its $100 par value. Preferred stock of this type currently yields 7%. Assume dividends are paid annually. What is the value of Rolen's preferred stock? Rou..
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