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Folic Acid Inc. has $20 million in earnings, pays $3 million in interest to bondholders, and $2 million in dividends to prefe

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Answer #1

Common stockholders residual claims to earnings

Common stockholders residual claims to earnings = Net Earnings – Interest to bond holders - Dividends to preferred stockholders.

= $20.00 Million - $3.00 Million - $2.00 Million

= $15.00 Million

“Hence, the Residual claims to earnings will be $15.00 Million”

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