1) Ott Transportation Corp can issue perpetual preferred stock at a price of $88 a...

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Finance

1) Ott Transportation Corp can issue perpetual preferred stock at a price of $88 a share with an annual dividend of $4.00 a share. Ignoring flotation costs, what is the companys cost of preferred stock rPS?

A. 4.55%

B. 4.00%

C. 44.00%

D. 46.25%

2) In the after cost of debt formula, what rate would you use for the cost of debt for a firm with 8% outstanding coupon bonds and a yield to maturity of 6.5%?

A. 6.5%

B. 8.0%

C. 2.5%

D. 14.5%

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