Question

Preferred dividends Acura Labs Inc. has an outstanding issue of preferred stock with a par value of ​$30 and an 8​% annual dividend. a. What is the annual dollar​ dividend? If it is paid​ quarterly, how much will be paid each​ quarter? b. If the preferred stock is noncumulative and the board of directors has passed the preferred dividend for the last 3 ​quarters, how much must be paid to preferred stockholders in the current quarter before dividends are paid to common​ stockholders? c. If the preferred stock is cumulative and the board of directors has passed the preferred dividend for the last 3 ​quarters, how much must be paid to preferred stockholders in the current quarter before dividends are paid to common​ stockholders? a. The annual dollar dividend is ​$ nothing. ​(Round to the nearest​ cent.)

Answer 1

Answer:

a) 2.40 dollars

b) 0.60 dollars

c) 2.40 dollars

Explanation:

$30 dollars x 8% = $2.40

quarterly dividend:_ $2.40 / 4 = $ 0.60

When the dividends ar cummulative, they will keep at arrear until the company declares cash dividend. The firm will not be able to pay common stock unless there are no arrear dividends to preferred stock.

Only once all the preferred dividends in arrear and current period dividends are paid, the ocvmany can distribute among their common stock.