question archive JJ firm issues preferred dividends at an annual rate of $3
JJ firm issues preferred dividends at an annual rate of $3
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JJ firm issues preferred dividends at an annual rate of $3.06. Its current preferred stock price is $22.65. Assume that the equity beta for JJ is 0.93. The Yield on 10-year treasuries is 2.74%, and that the market risk premium for the year is 7%. The company's EPS expected growth is 3%. For this year, the dividends for JJ firm are the same for common and preferred stock; additionally the price for common stock is $28. What is the preferred cost of equity for JJ Firm?
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Preferred cost of equity = 13.51%
Step-by-step explanation
Preferred cost of equity = (annual dividend/price)*100
Preferred cost of equity = (3.06/22.65)*100
Preferred cost of equity = 13.51%
