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# Calculating cash dividends

Calculate the cash dividends required to be paid for each of the following preferred stock issues:

a. The semiannual dividend on 6% cumulative preferred, \$50 par value, 30,000 shares authorized, issued, and outstanding.

b. The annual dividend on \$3.60 cumulative preferred, 400,000 shares authorized, 180,000 shares issued, 148,200 shares outstanding. Last year's dividend has not been paid

c. The quarterly dividend on 7.5% cumulative preferred, \$100 stated value, \$103 liquidating value, 120,000 shares authorized, 112,000 shares issued and outstanding. No dividends are in arrears.

#### Solution Preview

The dividend rates stated on preferred shares are always annual dividend rates. Thus, if the dividend is paid more frequently, it must be adjusted.

a. The semiannual dividend on 6% cumulative preferred, \$50 par value, 30,000 shares authorized, issued, and outstanding.

Par value per share \$50.00
Annual dividend rate per share .06
Annual dividend per share \$ 3.00 ...

\$2.19