Sunland Company has 10,000 shares of 8%, $100 par value, cumulative preferred stock outstanding at December 31, 2022. No dividends were declared in 2020 or 2021. If Sunland wants to pay $395,000 of dividends in 2022, what amount of dividends will common stockholders receive?
The amount of dividends received by common stockholders is $155,000
The dividends to preferred shareholders is computed as:
Dividends to preferred shareholders = Shares × Price per share × 8% × Number of years
Shares are 10,000
Price per share is $100
Number of years is 3 (2020,2021 and 2022)
Putting the values above:
= 10,000 × $100 × 8% × 3
= $80,000 × 3
The amount of dividends received by common stockholders is computed as:
Amount = Dividends to be paid in year 2022 -Dividends to preferred shareholders
$395,000 - $240,000
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Business, published 27.03.2023
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