Cost of preferred stock

r = Dividends / Required rate of return

The market price of a company’s preferred stock is the amount of preferred dividends, divided by the required rate of return.  

Since this is the return that investors currently expect from the preferred stock, it is also the cost that the company needs to pay when it issues new preferred stock.  

The cost of preferred stock is therefore the preferred dividend, divided by the market price of the preferred stock.  

r= Dividends / Market price of preferred stock

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