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Day Inc. has 4,314 shares of 8%, $100 par value cumulative preferred stock and 80,826 shares of...

Question:

Day Inc. has 4,314 shares of 8%, $100 par value cumulative preferred stock and 80,826 shares of $1 par value common stock outstanding at December 31. What is the annual dividend on the preferred stock?

Preferred Stock:

The preferred stock is a type of stock that gets the priority over common stock. The preferred stock can be the cumulative, participative or can be both. Such shareholders do not receive voting rights in the company.

Answer and Explanation:

Formula on calculating the annual dividend on the preferred stock

{eq}\begin{align*} Preferred~Stock~Annual~Dividend&=Number~of~Shares*Par~value*Dividend~rate\\ &=4,314*100*.08\\ &=34,512 \end{align*} {/eq}

The annual dividend on the preferred stock is $34,512


Learn more about this topic:

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Cash Dividends & Dividend Payment

from Finance 101: Principles of Finance

Chapter 16 / Lesson 1
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