The cost of preferred stock for Ohio valley power company is 13.54%
What is cost of preferred stock?
The cost of preferred stock refers to the opportunity cost foregone by Ohio valley power company, due to having investment through the usage of its preferred capital.
Cost of preferred stock:
= Cumulative preferred stock ÷ (Price per share - flotation cost)
= 3.25 ÷ (25-1)
= 13.54%
Hence, the cost of preferred stock for Ohio valley power company should be 13.54%
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