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Cost of Capital

Ali AnsariAli Ansari7y ago
hello sir, From BPP revision kit question number 195 ,I don't understand how to do this it says preference share irredeemable, I understand that it is equity but i can't figure out a way to find the ex div market value and div is not given, can u please explain me
John MoffatJohn MoffatTutor7y ago#1
Preference shares have a fixed dividend. Since they are 8% preference shares, and the nominal/par value is $0.50, then dividend is 8% x $0.50 = $0.04 per year. Therefore the ex div price is $0.30 - $0.04 = $0.26. (Did you not look at the answer in the Revision Kit, because it shows the workings? :-) )
Ali AnsariAli Ansari7y ago#2
I did but I couldn't get it , Thanks sir for the explanation :)
John MoffatJohn MoffatTutor7y ago#3
You are welcome :-)
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