Carlton Investment Ltd has issued preference shares. On that date the preference share price was $2.05, the annual dividend was $0.14. Calculate the cost for Carlton’s irredeemable preference share.
a. The cost for Carlton’s irredeemable preference share is 6.83% per annum.
b. The cost for Carlton’s irredeemable preference share is 14.64% per annum.
c. None of the other answers are true.
d. The cost for Carlton’s irredeemable preference share is 28.7% per annum.
Kpref = d/p0
d = preference dividend
P0 = market value of preference shares
all the answers says .... .14/2.05
but its p/d ... making it 2.05/.14?