The 7 percent preferred stock of midwest muffler and towing is selling for $65 per share. what is the firm’s cost of preferred stock if the tax rate is 21 percent and the par value per share is $100?

Answers

10.77 percent is the firm’s cost of preferred stock if the tax rate is 21 percent and the par value per share is $100.

Unitary method is a process by which we find the value of a single unit from the value of multiple units and the value of multiple units from the value of a single unit. It is a method that we use for most of the calculations in math.

The cost is calculated by the formula by :-

Cost = Annual dividend paid / Price of preferred stock per share

Substituting the given values in the formula we get,

10.77 percentis the firm’s cost of preferred stock if the tax rate is 21 percent and the par value per share is $100.Unitary methodis a process by which we find the value of a single unit from the value of multiple units and the value of multiple units from the value of a single unit. It is a method that we use for most of the calculations in math.cost is calculated by the formula by :-Annual dividendpaid /Price of preferred stockper share10.77 percent.Unitary methodhere :