The rate of return (which is cost for the issuing company) on preferred stock is calculated by dividing fixed dividend by stocks's market value or par value (whichever is given. If both are given then use market value).
Columbus Veterinary Supplies can issue perpetual preferred stock at a price of $86 a share. The issue is expected to pay a constant annual dividend of $5.51 a share. Ignoring flotation costs, what is the company’s cost of preferred stock,rps? Express your answer in percentage (without the % sign) and round it to two decimal places.
