Question

4-AT&T Inc. (T) has a preferred stock issue outstanding on which it pays an annual dividend of $195. The stock price is
currently at $36.91. If the company were to sell a new issue of preferred stock today with the same characteristics as its
outstanding issue, it would incur flotation costs of $1.23 per share. What would you estimate the cost of preferred stock
financing to be for the firm?
6.5796
5.3296
6.3196​

Answer 1

ANS: 5796 + 3296 + 3196

=12,288

FINANCING TO THE FIRM = 12,288

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