There are 3,500 preferred shares outstanding of McDonalds stock with an annual dividend of $2 per share.

There are 3,500 preferred shares outstanding of McDonalds stock with an annual dividend of $2 per share. If McDonalds has not paid a preferred dividend in 6 quarters, how much does it need to pay to preferred shareholders in total before it is able to pay any common dividends?

$10,500

$11,200

$14,800

$8,000

Expert Solution

Answer is $10,500

Annual dividend per share = $2.00
Number of preferred shares outstanding = 3,500

Annual preferred dividend = Annual dividend per share * Number of preferred shares outstanding
Annual preferred dividend = $2.00 * 3,500
Annual preferred dividend = $7,000

Quarterly preferred dividend = Annual preferred dividend / 4
Quarterly preferred dividend = $7,000 / 4
Quarterly preferred dividend = $1,750

Preferred dividend is arrear for 6 quarters

Total preferred dividend in arrear = Quarterly preferred dividend * Number of quarters for which dividend is in arrear
Total preferred dividend in arrear = $1,750 * 6
Total preferred dividend in arrear = $10,500

Therefore, the company has to pay $10,500 to its preferred shareholders before it is able to pay any common dividends.

jeff jeffy answered 2 years ago

McKerley Corp. has preferred stock outstanding that will pay an annual dividend of $5.80 per share...

McKerley Corp. has preferred stock outstanding that will pay an annual dividend of $5.80 per share with the first dividend exactly 10 years from today. If the required return is 4.02 percent, what is the current price of the stock?

Maria Inc’s share capital consists of: 2,000 preferred shares outstanding, $6.50 per share dividend, and a...

Maria Inc’s share capital consists of: 2,000 preferred shares outstanding, $6.50 per share dividend, and a $100 stated (par) value; 5,000 common shares outstanding for which $300,000 was received. Assume that $88,000 is available for dividend distribution. Preferred shares have not been paid for the two Preceding years. Required: For each situation below, state how much of the $88,000 will be distributed to each share class. Pref erred shares are cumulative and non-participating (3 mark) Pref erred shares are cumulative...

The outstanding share capital of Pronghorn Corporation consists of 3,500 shares of preferred and 6,900 common...

The outstanding share capital of Pronghorn Corporation consists of 3,500 shares of preferred and 6,900 common shares for which $248,400 was received. The preferred shares carry a dividend of $5 per share and have a $100 stated value. Assuming that the company has retained earnings of $77,500 that is to be entirely paid out in dividends and that preferred dividends were not paid during the 2 years preceding the current year, state how much each class of shares should receive...

A. No Growth DDM A perpetual preferred stock pays an annual dividend of $2.20 per share...

A. No Growth DDM A perpetual preferred stock pays an annual dividend of $2.20 per share and investors require an 9% return. The intrinsic value of a share of this stock is _______. $20.87 $24.44 $ 19.80 $23.98 B. Constant Growth DDM A stock just paid a dividend of $1.00 per share. Dividends are expected to grow at a constant rate of 9% per year forever. Investors expect and require a 12% return on this investment. The intrinsic value of...

Company A currently has a stock price $20/per share, with outstanding shares 2 Mil shares. It...

Company A currently has a stock price $20/per share, with outstanding shares 2 Mil shares. It also has outstanding debt of 20 Mil. Tax rate is 30%. Its annual bond with 10 year maturity date has a price now $886, par value $1000 and coupon rate is 7%. It has a beta of risk 1.2, risk free rate 4% and market index return 9%. Please answer following parts with above information Part1) what is the cost of debt before tax?...

Filmore, Inc. just issued preferred stock. If the preferred dividend is $1.90 per share and shareholders...

Filmore, Inc. just issued preferred stock. If the preferred dividend is $1.90 per share and shareholders require an 3% return, what is the maximum amount an investor would pay for one share of Filmore preferred stock? (Enter your answer to the nearest cent without & or commas.)

DRIP evaluation initial number of shares 100 initial stock price per share $100 annual dividend per...

DRIP evaluation initial number of shares 100 initial stock price per share $100 annual dividend per share $2 dividend annual growth rate 3% stock price annual growth rate 5% number of years 10 ------------- -- without DRIP with DRIP EOP total value in dollars EOP number of shares EOP dividends Paid PLEASE SHOW YOUR WORK***

Carby Hardware has an outstanding issue of perpetual preferred stock with an annual dividend of $8.40...

Carby Hardware has an outstanding issue of perpetual preferred stock with an annual dividend of $8.40 per share. If the required return on this preferred stock is 6.5%, at what price should the preferred stock sell? Select the correct answer. a. $131.30 b. $129.92 c. $130.61 d. $129.23 e. $128.54

Millco Victoria has preferred shares outstanding and pays a semi-annual dividend of $4.50. If the next...

Millco Victoria has preferred shares outstanding and pays a semi-annual dividend of $4.50. If the next dividend is paid six months from now and the annual required return is 12%, how much would you pay today if you want to buy a preferred share from this company? Select one: a. $50.00 b. $25.00 c. $75.00 d. $66.25

TAFKAP Industries has 2 million shares of stock outstanding selling at $16 per share, and an...

TAFKAP Industries has 2 million shares of stock outstanding selling at $16 per share, and an issue of $12 million in 8.0 percent annual coupon bonds with a maturity of 15 years, selling at 105 percent of par. Assume TAFKAP’s weighted average tax rate is 21 percent, it can make full use of the interest tax shield, and its cost of equity is 14.0 percent. What is TAFKAP’s WACC? (Do not round intermediate calculations. Round your final answer to 2...

Question