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[Solution Library] Cost of preferred stock Taylor Systems has just issued preferred stock. The stock has a 12 \% annual dividend and a $100 par value and was

Question: Cost of preferred stock Taylor Systems has just issued preferred stock. The stock has a \(12 \%\) annual dividend and a $100 par value and was sold at $97.50 per share. In addition, flotation costs of $2.50 per share must be paid.

  1. Calculate the cost of the preferred stock.
  2. If the firm sells the preferred stock with a \(10 \%\) annual dividend and nets $90.00 after flotation costs, what is its cost?

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