This answer has added the issue costs to determine the proceeds from the sale rather than subtracting them. See the correct answer for a complete explanation.
The cost of the preferred stock is based on the amount that they will pay out as dividends and the amount that is received from the sale. The company will receive only $64 per share, but the dividend that they will pay is 6% of the $65 par value, or $3.90. So the cost of the preferred shares is $3.90 / $64, or 6.09%.
This is the stated rate of dividends that the preferred stock will pay. The cost needs to be calculated using the dividends to be paid and the proceeds from the sale. See the correct answer for a complete explanation.
This answer does not subtract the issue costs from the sales price to calculate the proceeds from the sale of the securities.
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