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A corporation has 1,500 shares of 10 percent, $40 par-value preferred stock and 10,000 shares of...
A corporation has 1,500 shares of 10 percent, $40 par-value preferred stock and 10,000 shares of $3 par-value common stock outstanding. If the board of the directors decides to distribute dividends totaling $38,000, the common stockholders will receive a dividend of
Solutions
Expert Solution
The dividend received by common stock holders is available net income left after paying preferred dividend.
Common stockholders dividend =$38,000 - [(1,500*$40) * 0.10]
= $38,000 - $6,000
= $32,000
Therefore, dividend available for common stockholders is $32,000.
However, if the same $32,000 dividend is distributed between 10,000 equity shares, the dividend per share would be $3.2 (i.e., $32,000/10,000).
ekkarill92 answered 1 year agoRelated Solutions
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