Solution-Investor required rate of return

Investor required rate of return

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Assume that a firm can issue preferred stock that has a $70 par value and pays a 15.0% annual dividend each year. The firm's investment bankers believe that investors will be willing to pay $84.00 per share and that flotation costs will be equal to $12.69 per share. Given this information, determine the difference between the investor's required rate of return, and the firm's cost of preferred stock.

Reference no: EM133072656

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Investor required rate of return

Reference no: EM133072656

Reference no: EM133072656

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