Answer:
B. 21.8%
Explanation:
Cost of preference capital = [tex]\frac{dividend}{price}\times100[/tex]
No adjustment of growth rate is done as the dividend on preference capital is constant and do not grow in normal conditions, that is it only differs in exceptional conditions.
therefore, in the given instance we have,
Dividend = $2.40
Current price = $11
Expected Return = [tex]\frac{2.40}{11.00} \times 100[/tex] = 21.8%
Thus correct option is
B. 21.8%
