Question

Given 20,000 Shares cumulative preferred stock ($2.25 dividend per share): 400,000 shares common stock dividends paid 2016, $8,000 2017 0; and 2018 $160,000 how much will preferred and common stockholders receive each year?

Answer 1

No. of preferred stocks	20000
Preferred Dividend ($ per share)	2.25
Preferred Dividend to be paid each year ($)	45000
No. of common stocks	400000

The preferred stockholders are paid in priority compared to common stockholders. Hence, any dividend payout to common stockholders is possible only after the company pays out current year preferred dividend dues and previous years' preferred dividend arrears.

	2016	2017	2018
Actual Dividend paid ($)	8000	0	160000
Preferred dividend due from previous year ($)	0	37000	82000
Preferred Dividend due for current year ($)	45000	45000	45000
Preferred Dividend arrear for next year ($)	37000	82000	0
Common Stock Dividends ($)	0	0	33000
Common Dividend per share ($)	0	0	0.0825