Assume you work for a company that has issued 10000 shares of $100 par 5% preferred. The return of stock of this risk class is 6%.
a. What is the market price of this stock based on its dividend?
b. If there were 100,000 shares of $50.00 market value common, what would the weight of the preferred stock be in the weighted average cost of capital?
c. Calculate the expected price of one share of preferred stock.