A Firm Had a Major Fire Which Hampered Operations for the Past

question 28

Multiple Choice

A firm had a major fire which hampered operations for the past year. As a result, the firm discontinued all dividends for one year. Next month, the firm will resume paying dividends. The normal quarterly payments are $1.50 for the cumulative preferred shares and $0.95 for the common shares. How much will the firm need to pay the preferred shareholders per share if the firm also pays a common dividend?

• A) $0.00
• B) $4.75
• C) $6.00
• D) $7.50
• E) $8.00