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    Residual claims &legal rights of common stockholders

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    Folic Acid, Inc. has $20 million in earnings, pays $2.75 in interest to bondholders, and $1.80 million to dividends to preferred stockholders.

    a. What are the common stockholders' residual claims to earnings?
    b. What are the common stockholders' legal, enforceable claims to dividends?

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    Solution Summary

    There are ansswers for two questions: 1. computation of EAT to common stock holders and 2. Legal and enforceable rights of common stockholders