What is the company cost of preferred stock

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Adams Corporation estimates that it can issue debt at a before-tax cost of 10%. Its tax rate is 30%. In addition, the company can issue preferred stock at $49 per share, which pays an annual dividend of $5. The company's common stock is currently selling at $36 per share. The expected dividend for next year is $3.50, and the dividends are expected to grow at a constant rate of 6%. The company's capital structure consists of 75% common stock, 15% debt, and 10% preferred stock. What is the company's cost of preferred stock?

Reference no: EM131842899

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