A Company's Board of Directors Votes to Declare a Total

question 134

Multiple Choice

A company's board of directors votes to declare a total cash dividend of $25,000.The company has 2,500 shares of $1 par common stock and 400 shares of 4%,$200 par preferred stock outstanding.What is the total amount that will be paid to preferred shareholders?

• A)$1,000
• B)$22,500
• C)$400
• D)$3,200
• E)$25,000

---

Definitions:

Future Value

The value of an investment at a specific date in the future, accounting for specified interest rates or returns.

Present Value

The contemporary value of a forthcoming amount of money or cash flow stream, determined by a certain rate of return.

Discount Rate

The rate at which regional Federal Reserve Banks lend to commercial banks and other financial institutions, charged for loans obtained from the Federal Reserve's lending facility.

Present Values

The current worth of a future sum of money or stream of cash flows given a specified rate of return, taking into account the time value of money.