A company has outstanding 10 million shares of $2 par common stock and (1).docx
A company has outstanding 10 million shares of $2 par common stock and 1 million shares of $4 par preferred stock. The preferred stock has an 8% dividend rate. The company declares $300,000 in total dividends for the year. Which of the following is true if the preferred stockholders have a cumulative dividend preference? Solution Preferred stockholders will receive the entire $300,000, and they must also be paid $20,000 sometime in the future before common stockholders will receive anything. .
A company has outstanding 10 million shares of $2 par common stock and (1).docx
A company has outstanding 10 million shares of $2 par common stock and 1 million shares of $4 par preferred stock. The preferred stock has an 8% dividend rate. The company declares $300,000 in total dividends for the year. Which of the following is true if the preferred stockholders have a cumulative dividend preference? Solution Preferred stockholders will receive the entire $300,000, and they must also be paid $20,000 sometime in the future before common stockholders will receive anything. .
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A company has outstanding 10 million shares of $2 par common stock and (1).docx
- 1. A company has outstanding 10 million shares of $2 par common stock and 1 million shares of $4 par preferred stock. The preferred stock has an 8% dividend rate. The company declares $300,000 in total dividends for the year. Which of the following is true if the preferred stockholders have a cumulative dividend preference? A.) Preferred stockholders will receive the entire $300,000, and they must also be paid $20,000 before the end of the current accounting period. Common stockholders will receive nothing. B.) Preferred stockholders will receive $24,000 (8% of the total dividends). Common stockholders will receive the remaining $276,000. C.) Preferred stockholders will receive the entire $300,000, and they must also be paid $20,000 sometime in the future before common stockholders will receive anything. D.) Preferred stockholders will receive the entire $300,000, but will receive nothing more relating to this dividend declaration. Common stockholders will receive nothing. Solution Preferred stockholders will receive the entire $300,000, and they must also be paid $20,000 sometime in the future before common stockholders will receive anything.