Raphael Corporation’s common stock is currently selling on a stock exchange at $

Question

Raphael Corporation’s common stock is currently selling on a stock exchange at $192 per share, and its current balance sheet shows the following stockholders’ equity section:

  

6.1

If two years’ preferred dividends are in arrears and the board of directors declares cash dividends of $26,900, what total amount will be paid to the preferred and to the common shareholders?

       
  

      

Raphael Corporation’s common stock is currently selling on a stock exchange at $192 per share, and its current balance sheet shows the following stockholders’ equity section:

Explanation / Answer

Solution:

Preferred dividend per year = 5% * $ 90,000 4,500 Dividend to be paid for two years arrears 9,000 Add: Preferred Dividend for current year 4,500 1 Amount paid to preferred shareholders - $ 4,500 + $ 9,000 13,500 2 Amount paid to common shareholders 26,900 3 Dividends per share to common stock - $ 26,900 / 4,000 shares 6.725

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