Answer:
$1.45
Explanation:
First of all we need to know what is earnings available to common shareholders (EACS).
EACS is the part of earnings which is available to common shareholders after deducting preference dividend from net income after taxes.
We can understand the as follows
Net Profit after taxes $ xxxx
Less: Preference dividend (xxxx)
Earnings available to.common shareholders xxxx
From this amount is we divide number of common stocks / shares, we will get Earnings Per Share (EPS)
EPS = Earnings available to equity shareholders / number of common stock shares
Dividend Payout Ration to common stock (given) = 20%
It means the comapny is paying 20% of EPS to common stock holders and 80% of EPS is tthe retained earnings of the company
Hence dividend to common stockholder = Earnings available.to common shareholders × dividend payout ratio
= $7.25 × 20%
= $1.45
$1.45 is the dividend which company pay to common shareholders
