Preferred dividend is €4, Preferred stock price is €60; risk premium of equity over debt is 5%; Debt, pays a coupon of €60, and trades at €965; Tax rate is 35%. Ratio of Debt/Equity = 40%; Ratio of Preferred Stock/Equity = 20%.
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Preferred dividend is €4, Preferred stock price is €60; risk premium of equity over debt is 5%; Debt, pays a coupon of €60, and trades at €965; Tax rate is 35%. Ratio of Debt/Equity = 40%; Ratio of Preferred Stock/Equity = 20%.
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