The board of directors has authorized $292,000 to be disturbed to its stockholde

Question

The board of directors has authorized $292,000 to be disturbed to its stockholders as an annual dividend. Your own 100 of the 8,000 shares of common stock which are outstanding. If there are also 2,000 shares of 6%,$100 par preferred stock outstanding, how much of a dividend will you receive? The board of directors has authorized $292,000 to be disturbed to its stockholders as an annual dividend. Your own 100 of the 8,000 shares of common stock which are outstanding. If there are also 2,000 shares of 6%,$100 par preferred stock outstanding, how much of a dividend will you receive?

Explanation / Answer

The dividend receivable on 2000 shares of 6 % $ 100 preferred stock is 2000*100 *6/100 = $ 12000. The balance amount of $ 292000-$12000 = $ 280000 is to be distributed among the common stock holders. Thus, on common stock of 100 shares, the dividend to be received is (100/8000)*280000 = $3500.

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