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December 2012 question 3 (a)
Kp= d/po right? So it should be 5 c/625 right?
The answer is 8% (5/62.5) as you can see in the examiners own answer.
You can either calculate it per share (as you are doing) or in total (as the examiner has done) but both will always give the same answer. It doesn’t matter which way you do it.
Can you details it please.
I don’t know what you mean by ‘details it’.
The cost of preference shares is D/Po (it is the dividend valuation formula as normal, but preference shares have a fixed dividend and so g is zero).
The examiners answer should now make sense, but if not then say which bit is puzzling you.