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Calculate the cost of preferred stock for ohio valley power company, which is planning to sell p100 million of p3. 25 cumulative preferred stock to the public at a price of p25 per share. Flotation costs are p1. 00 per share. Ohio valley has a marginal income tax rate of 40%.

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ayokenny2001

The cost of preferred stock for Ohio valley power company is 13.54%

What is cost of preferred stock?

The cost of preferred stock refers to the opportunity cost foregone by Ohio valley power company, due to having investment through the usage of its preferred capital.

Cost of preferred stock:

= Cumulative preferred stock ÷ (Price per share - flotation cost)

= 3.25 ÷ (25-1)

= 13.54%

Hence, the cost of preferred stock for Ohio valley power company should be 13.54%

Learn more about the stock here: https://brainly.com/question/25557702

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