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31 March, 16:11

As 2017, Buttle Corp. has $10 par, 2% preferred stock, 6,500 shares outstanding, and $1 par common stock with 32,000 shares outstanding. The preferred stock is cumulative and preferred stockholders last received a dividend in 2014. If the company wants to distribute $4 per share to the common stockholders in 2017, what is the total amount of dividends that the company must pay at the end of the current year? A. $129,300 B. $128,000 C. $ 3,900 D. $131,900 E. None of the above

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  1. 31 March, 16:14
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    D. $131,900

    Explanation:

    For computing the total amount of dividend first we have to calculate the yearly dividend which is shown below:

    Per year dividend for preferred stock is

    = $10 * 6,500 * 2%

    = $1,300

    For 3 years, the total dividend is

    = $1300 * 3 years

    = $3,900

    And,

    Total common dividend is

    = $4 * 32,000

    = $128,000

    So, the total dividend paid is

    = $128,000 + $3,900

    = $131,900
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