1. Gracey's Department Stores has $200,000 of 6% cumulative, nonparticipating, preferred stock outstanding. Gracey's also has $600,000 of common stock outstanding. During its first year of operations,no dividends were paid. During the second year, the company paid cash dividends of $30,000. This dividend should be distributed as follows:

a. 15,000 preferred 15,000 common

b. 6,000 preferred 24,000 common

c. 24,000 preferred 6,000 common

2. A company issues 5%, 20-year bonds with a par value of $600,000. The current market rate is 8%. The amount of interest owed to the bondholders for each semiannual interest payment is.

a. 15,000

b. 48,000

c. 30,000