Why would we expect a company like intel to report a relatively high proportion of equity vis-à-vis liabilities? : ?

Component cost of preferred stock is 11.4583 %

Explanation:

Given Data:

Preferred stock selling=96 percent of par.

Annual Coupon =11 percent

Required:

What would be Marme’s component cost of preferred stock?

Solution:

The formula we are going to use is:

Where:

is  11 percent annual coupon

preferred stock selling for 96 percent of par

If we convert the above percentage to dollar using the scale $1=1% then:

=$11

=$96

Component cost of preferred stock is 11.4583 %