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What is the firm cost of preferred stock

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1. O'Brien Inc. has the following data: rRF = 5.00%; RPM = 6.00%; and b = 1.10. What is the firm's cost of equity from retained earnings based on the CAPM?

2. Assume that you are a consultant to Broske Inc., and you have been provided with the following data: 

DI = $0.67; PO = $42.50; and g = 8.00% (constant). 

What is the cost of equity from retained earnings based on the DCF approach?

3. A company's perpetual preferred stock currently sells for $115.00 per share, and it pays an $8.00 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of 5.00% of the issue price. What is the firm's cost of preferred stock?

Reference no: EM132788234

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