Preferred stock of nadine fashions

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1. Last week, Lester's Electronics paid an annual dividend of $2.4 on its common stock. The company has a longstanding policy of increasing its dividend by 4 percent annually. This policy is expected to continue. What is the firm's cost of equity if the stock is currently selling for $42 a share?

2. The preferred stock of Nadine Fashions pays an annual dividend of $3.55 a share and sells for $52.5 a share. The tax rate is 31 percent. What is the firm's cost of preferred stock?

3. Calculate the weighted average cost of capital for the following firm: it has $600000 in debt, $400000 in common stock and $200000 in preferred stock. It has a 4% cost of debt, 14% cost of common stock, 12% cost of preferred stock and a 34% tax rate.

Reference no: EM131152484

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