What is the bank cost of preferred stock

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Reference no: EM131575657

Stock in Country Road Industries has a beta of 1.05. The market risk premium is 9.5 percent, and T-bills are currently yielding 3.5 percent. The company's most recent dividend was $1.8 per share, and dividends are expected to grow at a 6.5 percent annual rate indefinitely. If the stock sells for $32 per share, what is your best estimate of the company's cost of equity? (Do not round your intermediate calculations.)

a) 9.8%

b) 13.47%

c) 12.49%

d) 11.35%

e) 12.98%

2. Holdup Bank has an issue of preferred stock with a $5 stated dividend that just sold for $91 per share. What is the bank's cost of preferred stock?

a) 5.71%

b) 5.49%

c) 5.00%

d) 5.77%

e) 5.27%

Reference no: EM131575657

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