s://newconnect.mheducation.com/flow/connect.html mework The shareholders\' equit

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s://newconnect.mheducation.com/flow/connect.html mework The shareholders' equity of MLS Enterprises includes $190 million of no par common stock and $380 million of 5% cumulative preferred stock. The board of directors of MLS declared cash dividends of $44 million in 2018 after paying $16 million cash dividends in both 2017 and 2016. what is the amount of dividends common shareholders will receive in 2018? (Enter your answers in millions (i.e., 10,000,000 should be entered as 10).) Dividend Rate (%) Annual Preferred Dividends in Arrears at year-end Paid to Preferred Paid to Common Dividend Paid 2016 2018

Explanation / Answer

SOLUTION

*$19 million current preference (5% * $380 million), thus $3 ($19-$16) million dividends in arrears

** $19 million current preference (5% * $380 million), thus another $3 ($19-$16) million dividends in arrears

*** $6 million dividends in arrears plus the $19 million current preference

Par Value Preferred Stock Dividend rate Annual Preferred Dividend Annual Preferred Dividend $380 5% $19 Total cash dividend paid ($) Paid to preferred Paid to common Dividends in Arrears at year-end 2016 16 16* 3 2017 16 16** 6 2018 44 25*** 19 0 Total 76 57 19

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