Allied Co has cumulative preferred stock with a $100 par value and a 12 percent annual dividend. No dividend has been paid for the past two years. What must the preferred stockholders be paid prior to paying the common stockholders

Allied Co.

The amount that must be paid to the preferred stockholders prior to paying the common stockholders is:

= $36.

Explanation:

a) Data and Calculations:

Cumulative preferred stock = $100 par value

Annual dividend on the preferred stock = 12%

Annual dividend on the preferred stock = $12

Cumulative preferred stock dividend = $24 ($12 * 2)

The amount of dividend to pay preferred stock = $36 ($24 + $12)

b) $24 was in arrears for the past 2 years.  In the current year, $12 is due to the preferred stockholders as dividends.  This adds up to $36 in total to be paid this year before any dividends can be paid to the common stockholders.

answer: e

explanation:

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