Assume the Following Capital Structure: Preferred Stock, 6%, $50 Par

question 49

Multiple Choice

Assume the following capital structure: Preferred stock, 6%, $50 par value, 1,000 shares issued and outstanding with dividends in arrears for three prior years (2011-2013) .
Common stock, $100 par value, 2,000 shares issued and outstanding.
Total dividends declared and paid in 2014 were $50,000. How much of the 2014 dividend will be paid to the preferred stockholders assuming the preferred stock is cumulative?

• A) $12,000.
• B) $3,000.
• C)$47,000.
• D)$38,000.

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Definitions:

RRSP

Registered Retirement Savings Plan, a retirement savings and investment account for holding savings and investment assets, recognized by the Canadian government.

Month-end Contributions

Payments or deposits made towards an investment or savings plan at the end of each month.

Compounded Monthly

Interest that is calculated and added to the principal balance once a month.

Family Support

Financial contributions, typically governed by legal or agreement, made to support the wellbeing and upkeep of family members.