Sixth Fourth Bank has an issue of preferred stock with a 670

Sixth Fourth Bank has an issue of preferred stock with a $6.70 stated dividend that just sold for $87 per share.

What is the bank’s cost of preferred stock? (percentage rounded to 2 decimal points)

How would you set this up?

Solution

cost of prefered stock=dividend/market price=6.7/87=0.0770=7.70%