What Is Cost of Preferred Stock?

Preference shares are shares that the company has priority over ordinary shares when it distributes dividends and liquidates company property.

Preferred stock cost

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Preference shares are shares that the company has priority over ordinary shares when it distributes dividends and liquidates company property.

Cost of Preferred Stock
Preference shares take precedence over ordinary shares to receive dividends and share company operating dividends, and dividends are generally fixed, so preference shares and bonds are similar in some respects.
The cost calculation formula is: Kps = Dps / P
Kps represents the cost of preferred stock; Dps represents the dividend of preferred stock; P represents the market price of the preferred stock.
Example: If the stock price of Dexter's preferred stock is $ 100 per share, a dividend of $ 8 per share is paid for the cost of its preferred stock.
answer:
Kps = Dps / P

= $ 8 / $ 100

= 8%