A company has issued ordinary shares and cumulative preference shares. The dividend payable on the preference shares is equal to $4.00 per year. In 2015 the company made a loss, and no dividends were payable. In 2016 the company made a handsome profit and the Board announced their intention to pay a $3 preference dividend and a $5.00 ordinary dividend.

What size dividendwill the Board actually be allowed to pay ordinary shareholders.

Select one:

a. $0.00

b. $5.00

c. $2.50

d. $1.00