Annual preferred dividend = Number of preferred shares x Par value of 1 preferred share x Dividend rate
= 20,000 x 100 x 2%
= $40,000
Hence, in year 1, dividend Paid of $10,000 belongs to preferred stockholders only. No dividend will be given to common stockholders in year 1 out of $10,000 dividend paid.
Dividend per share for preferred stock = Total dividend paid/Number of preferred share
= 10,000/20,000
= $0.50
Dividend per share for common stock = $0
Second option is the correct option.
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