Homework Answers
Answer is “$46.80/share”
Par Value per share = $120.00
Dividend Rate = 13%
Preferred Dividend per share = Dividend Rate * Par Value per
share
Preferred Dividend per share = 13% * $120.00
Preferred Dividend per share = $15.60
For the past 2 years, the board did not pay a dividend. Therefore, the company will pay a dividend for 3 years to preferred shareholders before paying a dividend to common shareholders.
At the end of the current year, the preferred stockholders must be paid $46.80/share (3 * $15.60) prior to paying the common stockholders.
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