A Firm Has an Outstanding Issue of 1,000 Shares of Preferred

question 78

Multiple Choice

A firm has an outstanding issue of 1,000 shares of preferred stock with a $100 par value and an 8 percent annual dividend. The firm also has 5,000 shares of common stock outstanding. If the stock is cumulative and the board of directors has passed the preferred dividend for the prior two years, how much must the preferred stockholders be paid prior to paying dividends to common stockholders at the end of third year?

• A) $8,000
• B) $16,000
• C) $24,000
• D) $25,000

---

Definitions:

Units Of Y

A measure or quantity of a variable \"Y\", often used in economic and mathematical models to quantify something.

Fixed Proportions

A production process condition where inputs must be used in strict, unchangeable ratios to produce an output; no substitution between inputs is possible.

Utility Function

An economic term describing how different goods or services yield different levels of satisfaction or utility to a consumer.

Units

Refers to the individual or measurable components that can be sold, used, or accounted for, in various contexts such as production, inventory, or measurement standards.