The cost of preferred stock if its stated value is $100 per share is 12.24%.
Cost of preferred stock refers to a rate that company must pay its investors to persuade them to invest in the available preferred shares.
- The formula for the use to derive the Cost of Preferred Stock is {Annual Dividend*Stated value /Price of Preferred Stock}
Cost of preferred stock = (0.06 * $100) / $49
Cost of preferred stock = $6/$49
Cost of preferred stock = 0.1224
Cost of preferred stock = 12.24%
Therefore, the cost of preferred stock if its stated value is $100 per share is 12.24%.
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