Use the Following Information for Questions 74-76

question 21

Multiple Choice

Use the following information for questions 74-76.
Instanbul Corp. has outstanding 20,000 no par value, $ 0.80, preferred shares and 100,000 no par value common shares. Dividends have been paid every year except last year and the current year. The carrying value of the preferred shares is $ 200,000 and of the common shares is $ 300,000.
-If the preferred shares are noncumulative and fully participating and $ 70,000 is distributed as a dividend, the common shareholders will receive

• A) $ 0.
• B) $ 42,000.
• C) $ 46,000.
• D) $ 54,000.

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Definitions:

Marginal Tax Rate

The marginal tax rate is the rate at which your last dollar of income is taxed, essentially the rate applied to your next dollar of taxable income.

Corporate Bond

A debt security issued by corporations to raise capital, promising to pay back the face value in addition to interest.

Municipal Bond

A debt security issued by a city, municipality, or county to finance its capital expenditures, often offering tax-free interest payments to investors.

Municipal Bond

A debt security issued by a state, municipality, or county to finance its capital expenditures, often tax-exempt for investors.