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

Question

Melanie Murillo

Business

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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Answers (1)

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Dominique Torres · Answer 1

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