# Gem Systems has recently issued preferred stock.

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Gem Systems has recently issued preferred stock. 1 answer below » Gem Systems has recently issued preferred stock. The stock has a 12% annual dividend based on a par value of \$100 per share. The stock is currently selling for \$97.50 per share in the secondary market (so that Po = \$97.50). Finally, flotation costs of \$2.50 must be paid for each new share Gem Systems issues. Show work (a) Calculate the cost of preferred stock based on the outstanding issue, given the current market price. (b) If Gem Systems sells a new issue of preferred stock carrying a par value of \$100 but with an annual dividend of 10% of par, what is the cost of this newly issued View complete question » Gem Systems has recently issued preferred stock. The stock has a 12% annual dividend based on a par value of \$100 per share. The stock is currently selling for \$97.50 per share in the secondary market (so that Po = \$97.50). Finally, flotation costs of \$2.50 must be paid for each new share Gem Systems issues. Show work (a) Calculate the cost of preferred stock based on the outstanding issue, given the current market price. (b) If Gem Systems sells a new issue of preferred stock carrying a par value of \$100 but with an annual dividend of 10% of par, what is the cost of this newly issued preferred stock if the firm nets \$90.00 per share after flotation costs? View less » Dec 10 2013 05:49 PM