What is the bank''s cost of preferred stock

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Reference no: EM13934345

Holdup Bank has an issue of preferred stock with a $8 stated dividend that just sold for $95 per share. What is the bank's cost of preferred stock?

Hint: The price of any asset is the present value of future cash flows. The preferred stock has a constant dividend, and is a perpetuity. Use the present value equation for a perpetuity to figure out the required return on the preferred stock.

8.00%

8.08%

8.76%

8.42%

8.84%

Reference no: EM13934345

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