A Corporation Has $10,000,000 of 10 Percent Preferred Stock Outstanding

question 128

Multiple Choice

A corporation has $10,000,000 of 10 percent preferred stock outstanding and a 40 percent tax rate. The amount of earnings before interest and taxes (EBIT) required to pay the preferred dividends is ________.

• A) $1,000,000
• B) $400,000
• C) $600,000
• D) $1,666,667

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