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# Dividends on Preferred Shares

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A corporation has 100,000 shares of 7 percent cumulative preferred stock and 40,000 shares of common stock outstanding.Par value for each is \$10. no dividends were paid last year, but this year a \$150,000 dividend is paid.

a) how much of this \$150,000 goes to the holders of preferred stock?

b)Assume the same facts as in Question 7, except that the preferred stock is non-cumulative.how much of the \$150,000 now goes to the holders of the common stock?

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#### Solution Preview

Answers are in the attached file:
A corporation has 100,000 shares of 7 percent cumulative preferred stock and 40,000 shares of common stock outstanding.Par value for each is \$10. no dividends were paid last year, but this year a \$150,000 dividend is paid.

a) how much of this \$150,000 goes to the holders of preferred stock?

# of Preferred shares= 100,000
Par value of Preferred shares= \$10.00
Dividend (per share) on preferred shares @ 7% = \$0.70 =7.% x ...

#### Solution Summary

Amount of dividends to preferred share holders has been calculated.

\$2.19