Sofia Ltd Reported Net Income of $ 5,300,000 for 2020, and and Earnings

question 31

Multiple Choice

Sofia Ltd. reported net income of $ 5,300,000 for 2020, and earnings per share of $ 5.00. Included in the net income was $ 750,000 of bond interest expense related to its long-term debt. The income tax rate for 2020 was 30%. Dividends paid on preferred shares were $ 1,000,000. The payout ratio on common shares was 25%. What were the dividends paid on common shares in 2020?

• A) $ 1,075,000
• B) $ 1,325,000
• C) $ 1,206,250
• D) $ 1,612,500

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Definitions:

Win-lose Strategy

A competitive strategy where one party's gain is perceived to be at the other party's loss, emphasizing conflict over cooperation.

Irrational Behavior

Actions or decisions that lack logic or reason, often influenced by emotions, misunderstandings, or cognitive biases.

Win-win Agreement

A negotiation result where all parties involved gain benefits or a satisfactory outcome, ensuring a positive situation for everyone.

Opposing Interests

Situations where different parties have interests that are in conflict with each other, often requiring negotiation or compromise.