(Solved): 3. The cost of preferred stock Preferred stock is a hybrid security, because it has some characteri ...

3. The cost of preferred stock Preferred stock is a hybrid security, because it has some characteristics typical of debt and others typical of equity. The following table lists various characteristics of preferred stock. Determine which of these characteristics is consistent with debt and which is consistent with equity. Consider the case of Galbraith Enterprises: At the present time, Galtraith Enterprises does not have any preferred stock outstanding but is looking to indude preferred stock in its capital structure in the future. Galbralth has found some institutional investors that are willing to purchase its preferred stock issue provided that it pays a perpetual dividend of \( \$ 13 \) per share. If the investors pay \$139,84 per share for their investment, then Gaforaith 's cost of preferred stock (rotnded to four decimal places) will be