Question

Healthy​ Farmer, Inc. has 46,000 shares of common stock outstanding and 4,000 shares of preferred stock...

Healthy​ Farmer, Inc. has

46,000

shares of common stock outstanding and

4,000

shares of preferred stock outstanding. The common stock is

$0.08

par​ value; the preferred stock is

6​%

noncumulative with a

$100.00

par value. On October​ 15, 2019, the company declares a total dividend payment of

$48,000.

What is the total amount of dividends that will be paid to the common​ stockholders?

A.

$24,000

B.

$48,000

C.

$3,680

D.

$32,000

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Homework Answers

Answer #1

The total dividend which is announced will be received by both the Common stockholders and the Preferred stockholders.

The company has 4000 Preference stock outstanding of Face value $ 100 each and the rate on each Preference share is 6%

Thus, the preference dividend is 6% of $ 100 = $ 6

Total Preference Dividend = $ 6 * 4000 = $ 24,000

Dividends for common stockholders = $ 48,000 - $ 24,000 = $ 24,000

Thus, choose Option A.

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