Question: Calculating Dividends Cheerful Chips Company has following share capital:8% Preferred shares, $30 par value, cumulative, 200,000 shares authorized, 19,000 issued and 17,000 shares outstanding.Common shares, $100 par value, 220,000 shares authorized, 15,000 shares issued and 10,000 outstandingRequired:Assume that the company wants to pay a total dividend of $300,000 and there are two years of preferred dividends in arrears, how much would each class of shareholders receive in total? And per share? “Shareholders will not invest in a company that has never paid a dividend”. Evaluate this statement fully.

Dividend are always based on shares outstanding. 8% cumulative preference shares,17,000 shares…

Answered: Required: Assume that the company…

10th Edition

ISBN:9781259964947

Author:Libby

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Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question: Calculating Dividends

Cheerful Chips Company has following share capital:

8% Preferred shares, $30 par value, cumulative, 200,000 shares authorized, 19,000 issued and 17,000 shares outstanding.

Common shares, $100 par value, 220,000 shares authorized, 15,000 shares issued and 10,000 outstanding

Required:

Assume that the company wants to pay a total dividend of $300,000 and there are two years of preferred dividends in arrears, how much would each class of shareholders receive in total? And per share?
“Shareholders will not invest in a company that has never paid a dividend”. Evaluate this statement fully.

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