Farm-Fresh Products, Inc., a supplier of fresh food products to regional grocery stores, is planning to issue new preferred stock to finance its new distribution warehouse. The preferred stock issue will be sold by an investment banking firm, New Investment Concepts, Inc., which charges a 4% flotation fee on the sale of these securities. The investment banking firm has estimated that the preferred stock will sell for a market price per share of $75.00 before flotation fees. The stock will have a par value of $25.00 per share and will pay a 10% dividend, based on its par value, annually. 

Given this information, what will be the annual percentage cost to Farm-Fresh Products, Inc. for this preferred stock financing?

Answer rating: 100% (QA)

Given the information provided the cost of preferred stock to FarmFresh Products Inc can be calculat... View the full answer