Chapter 8, Problem 8.2ME

Mini-Exercise 8.2

LO 2

Preferred stock-calculate dividend amounts Laura & Marty, Ltd., did not pay dividends on its 9.5%, $100 par value cumulative preferred stock during 2015 or 2016. Since 2009,175,000 shares of this stock have been outstanding. Laura & Marty, Ltd., has been profitable in 2017 and is considering a cash dividend on its common stock that would be payable in December 2017.

Required:

Calculate the amount of dividends that would have to be paid on the preferred stock before a cash dividend could be paid to the common stockholders.