At the End of Its First Year of Operations,Mendes Inc

question 218

Multiple Choice

At the end of its first year of operations,Mendes Inc.had 75,000 shares of preferred stock,5% cumulative,$100 par value.It also has 500,000 shares of common stock $0.01 par value.(The share information represents the numbers of shares issued and outstanding for both types of stock.) If sufficient dividends are declared,what is the per share dividend that will be paid on the preferred stock?

• A) $3,750
• B) $380,000
• C) $375,000
• D) $5,000

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value.

Salvage Value

The assessed salvage value of an asset at the close of its lifespan.

Pretax Return

The income earned by a company before taxes are deducted.

Internal Rate Of Return

The discount rate at which the net present value of an investment project is zero; the rate of return of a project over its useful life.