McBean Company has outstanding 25 million shares of $2 par value common stock an

Question

McBean Company has outstanding 25 million shares of $2 par value common stock and 2.5 million shares of S4 par value preferred stock. The preferred stock has a 7% dividend rate. The company declares $15,000,000 in total dividends for the year. Preferred Dividends in arrears are $750,000 a. Compute the amount of dividends to be distributed to preferred shareholders. (Enter your answer in dollars and not in millions. b. Compute the amount of dividends to be distributed to common shareholders. (Enter your answer in dollars and not in millions Type he DOLL F4 F6 F8 F10 8 7 4 5 6 8 9

Explanation / Answer

Answer

the amount of dividends to be distributed to preferred shareholder

= 2500000 * 4 * 7 % + 750000

= 700000 + 750000

= 1450000

preferred dividend = 1450000

the amount of dividends to be distribution to common shareholder

= 15000000 - 1450000

= 13550000

common dividend = 13550000

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