# Question: What is the firm’s cost of preferred stock?

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## How do you calculate the cost of preferred stock?

Here’s an easy formula for calculating the value of preferred stock: Cost of Preferred Stock = Preferred Stock Dividend (D) / Preferred Stock Price (P). Par value of one share of preferred stock equals the amount upon which the dividend is calculated. In other words, par value is the face value of one share of stock.

## What is cost of preference share?

The cost of preference share capital is apparently the dividend which is committed and paid by the company. This cost is not relevant for project evaluation because this is not the cost at which further capital can be obtained. … The preference share is issued at a stated rate of dividend on the face value of the share.

## How do you calculate the number of preferred shares issued?

You can find this information on the prospectus for the preferred stock. For example, assume the par value of the preferred stock \$12. Multiply the number of preferred shares outstanding by the par value of the preferred stock. Continuing the same example, \$100,000 x \$12 = \$1,200,000.

## How do you calculate common stock and preferred stock?

For example, a 5 percent dividend rate equals 0.05. Once you have the decimal amount, multiply the rate by the stock’s par value. To figure out how much you’ll earn per quarter, simply divide the answer by four. You can then multiply the number by however many preferred stock shares you own.