Question

The shareholders’ equity of MLS Enterprises includes $100 million of no par common stock and $200 million of 6% cumulative preferred stock. The board of directors of MLS declared cash dividends of $31 million in 2018 after paying $7 million cash dividends in both 2017 and 2016.

What is the amount of dividends common shareholders will receive in 2018?

Par Value Preferred Stock	Dividend Rate (%)	Annual Preferred Dividend
Annual Preferred Dividend:
	Total Cash Dividend Paid	Paid to Preferred	Paid to Common	Dividends in Arrears at year-end
2016
2017
2018
Total

Answer 1

• Annual Preference Dividend = $ 200 million x 6% = $ 12,000,000
• Schedule

	Total Cash Dividend Paid	Paid to Preferred	Paid to Common	Dividends in Arrears at year-end
2016	$      7,000,000.00	$     7,000,000.00	$                          -	$    5,000,000.00
2017	$      7,000,000.00	$     7,000,000.00	$                          -	$ 10,000,000.00
2018	$    31,000,000.00	$ 22,000,000.00	$     9,000,000.00	$                          -
Total	$    45,000,000.00	$ 36,000,000.00	$     9,000,000.00