Answer:
<u>year 1</u>
13,900 preferred
<u>year 2</u>
23,500 preferred
<u>year 3</u>
39,100 preferred
240,900 common stock
<u>year 4</u>
preferred 25,500
common stock 404,500
<u>Total:</u>
Preferred 102,000
Common 645,400
Explanation:
85,000 x $5 par x 6% = 25,500 dividen per year
becuase the dividend is cumulative it will accumulate over time.
Also preferred stock has prefecente over common stock.
year 1 13,900 - 25,500 = 11,600 accumulated dividend for preferred stock
year 2 23,500 - 25,500 = 2000 accumulated dividend for preferred stock
year 3 280,000 - 25,500 = 254,500 dividend for previous year preferred stock
254,500 - 2000 - 11,600 = 240,900 dividends for common stock
year 4 430,000 - 25,500 = 404,500 dividends for common stock
year
