A Company Has Issued 10 000 Non- Cumulative Preference Shares

question 7

Multiple Choice

A company has issued 10 000 non- cumulative preference shares for $50 each, paying 10% annual dividends. It has also issued 20 000 ordinary shares. At the end of the current year, the company declares a dividend of $120 000. What is the dividend per share for preference shares and for ordinary shares?

• A)The dividend per share is $50.00 to preference shares and $1.00 to ordinary shares.
• B)The dividend per share is $1.00 to preference shares and $6.75 to ordinary shares.
• C)The dividend per share is $5.00 to preference shares and $3.50 to ordinary shares.
• D)The dividend per share is $6.67 to preference shares and $1.50 to ordinary shares.

---

Definitions:

Total Assets

The sum of all current and non-current assets owned by an entity, representing the total resources available for use in operations or to pay liabilities.

Expenses

The outflow of money or assets to another entity as a result of a company's operations or activities intended to generate revenue.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing owner’s equity in the company.

Total Liabilities

The combined amount of obligations and debts a company owes to outside parties that must be repaid.