Billy's goat coats has a preferred share issue outstanding with a current price of $38.89. the firm last paid a dividend on the issue of $3.50 per share.
what is the firm's cost of preferred equity? round your final answer to the nearest percentage.

a) 9%
b) 10%
c) 8%
d) 7%

A) 9%

Explanation:

Billy's cost of preferred equity is how much interest the owners of preferred stock require Billy to pay them for lending money to the company, i.e. the rate or return required by preferred stockholders.

It is calculated by dividing the dividend paid to preferred stock by the current price of preferred stock = $3.50 / $38.89 = 9%

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.