preferred stock of detroit motors pays a dividend of $9.76 each year and trades at a price of $98.06. what is the cost of preferred stock capital for detroit motors? enter your answer in percent and round to the nearest one-hundredth of a percent. do not include the percent sign (%).

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07-12-2022
Business

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preferred stock of detroit motors pays a dividend of $9.76 each year and trades at a price of $98.06. what is the cost of preferred stock capital for detroit motors? enter your answer in percent and round to the nearest one-hundredth of a percent. do not include the percent sign (%).

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qwcricket qwcricket · Answer 1 · 2022-12-15T03:26:15-05:00

The cost of preferred stock capital for Detroit motors is 0.099.

Preferred stock dividend = $9.76

Trading at a price = $98.06

The return that investors might anticipate receiving on their investment in a company's preferred stock is measured by the cost of preferred stock capital. It is determined by dividing the share price by the annual dividend per share.

Calculating the cost of preferred stock capital -

= Preferred stock dividend / Trading Price

= 9.76 / 98.06

= 0.099.

This means that an investor in the company's preferred stock can expect to receive a return of 9.9% on their investment.

Investors should carefully weigh the cost of preferred stock capital before choosing to purchase a company's preferred shares. They can compare the possible returns of various assets using this information, which gives them an idea of the return they can anticipate receiving on their investment.

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