McBean Company has outstanding 25 million shares of $2 par value common stock an
ID: 2474265 • Letter: M
Question
McBean Company has outstanding 25 million shares of $2 par value common stock and 2.5 million shares of $4 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.
Compute the amount of dividends to be distributed to preferred shareholders. (Enter your answer in dollars and not in millions.)
Compute the amount of dividends to be distributed to common shareholders. (Enter your answer in dollars and not in millions.)
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.)
Explanation / Answer
The amount of dividends to be distributed to preferred shareholders :
(2.5 million shares x $4 par value x 7%) + 750,000 = $ 1,450,000
The amount of dividends to be distributed to common shareholders : $15,000,000 - $ 1,450,000 = $13,550,000