Chapter 8, Problem 8.12E

To determine

Concept Introduction:

Dividend Dividend is the reward given by the company from its residual profit to its shareholders. It can be in the form of cash or otherwise. It is given by the board of directors only after shareholder's approval through their voting rights. It is not mandatory for a company to declare dividends.

Dividends paid to the shareholders holding preferred stock of the company are termed as preferred dividends . This dividend is given preference over other common shares at the time of dividend distribution. In case of dividends remaining unpaid, dividends would be first paid to this class of shareholders whenever they are paid.

In case of cumulative shares if the dividend remains unpaid, that dividend amount is kept on cumulating over the years for which the dividend remains unpaid. In the event of dividend distribution, the cumulative dividend is also paid along with the regular dividend.

Requirement 1:

To calculate:

Semi- annual cash dividend to be paid on 9% cumulative preferred shares

To determine

Concept Introduction:

Dividend Dividend is the reward given by the company from its residual profit to its shareholders. It can be in the form of cash or otherwise. It is given by the board of directors only after shareholder's approval through their voting rights. It is not mandatory for a company to declare dividends.

Dividends paid to the shareholders holding preferred stock of the company are termed as preferred dividends . This dividend is given preference over other common shares at the time of dividend distribution. In case of dividends remaining unpaid, dividends would be first paid to this class of shareholders whenever they are paid.

In case of cumulative shares if the dividend remains unpaid, that dividend amount is kept on cumulating over the years for which the dividend remains unpaid. In the event of dividend distribution, the cumulative dividend is also paid along with the regular dividend.

Requirement 2:

To calculate:

Cash dividend to be paid on cumulative preferred shares

To determine

Concept Introduction:

Dividend Dividend is the reward given by the company from its residual profit to its shareholders. It can be in the form of cash or otherwise. It is given by the board of directors only after shareholder's approval through their voting rights. It is not mandatory for a company to declare dividends.

Dividends paid to the shareholders holding preferred stock of the company are termed as preferred dividends . This dividend is given preference over other common shares at the time of dividend distribution. In case of dividends remaining unpaid, dividends would be first paid to this class of shareholders whenever they are paid.

In case of cumulative shares if the dividend remains unpaid, that dividend amount is kept on cumulating over the years for which the dividend remains unpaid. In the event of dividend distribution, the cumulative dividend is also paid along with the regular dividend.

Requirement 3:

To calculate:

Quarterly cash dividend to be paid on 6.5% cumulative preferred shares