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algol13
3 years ago
9

Lego, Inc., issued common stock in Year 1. It issued 10,000 shares of 8%, $100 par value cumulative preferred stock for $110 per

share at the beginning of Year 4. It did not pay any dividends during Year 4. In December of Year 5, it declares total dividends of $200,000. How much will the preferred stockholders of Lego receive as dividends in Year 5?
Business
1 answer:
Arisa [49]3 years ago
5 0

Answer: $160,000

Explanation:

Given the following:

Par value = $100

Rate of Dividend = 8% = 0.08

Number of shares = 10,000

Preferred Dividend is calculated thus:

Par value * rate of Dividend × number of preferred stock

$100 × 0.08 × 10,000 = $80,000

Since year 4 Dividend wasn't paid

Total year 5 Dividend equals:

(Year 4 Dividend + year 5 dividend)

$(80,000 + 80,000) = $160,000

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