The formula to calculate the Cost of Preferred Stock (CPS) is:
\[ CPS = \left( \frac{DPS}{PPS} \right) \times 100 \]
Where:
The cost of preferred stock is defined as the rate of return required by the holder of a company's preferred stock.
Let's assume the following values:
Using the formula to calculate the Cost of Preferred Stock:
\[ CPS = \left( \frac{5}{100} \right) \times 100 = 5\% \]
The Cost of Preferred Stock is 5%.
