Ask Question
3 June, 22:51

Wallace Container Company issued $100 par value preferred stock 10 years ago. The stock provided a 7 percent yield at the time of issue. The preferred stock is now selling for $63. What is the current yield or cost of the preferred stock? (Disregard flotation costs.) (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

+5
Answers (1)
  1. 4 June, 01:32
    0
    Answer: kp = D/Po

    D = 0.07 X $100 = $7

    kp = 7/63

    kp = 11.11%

    Explanation: The dividend paid on the preferred stock is 7 percent of the par value and the current market price is $63. Thus, the cost of preferred stock can be obtained by dividing the dividend paid by the current market price of the preferred stocks.
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Wallace Container Company issued $100 par value preferred stock 10 years ago. The stock provided a 7 percent yield at the time of issue. ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers