Toto and Associates' preferred stock is selling for $27.50 a share. The firm nets $25.60 after issuance costs. The
stock pays an annual dividend of $3.00 per share. What is the cost of existing, and new, preferred stock
respectively?
What will be an ideal response?
Cost of existing preferred stock = $3.00/$27.50 = 10.91%
Cost of new preferred stock = $3.00/$25.60 = 11.72%
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