Assume that VOF has outstanding 250,000 no par common shares with a contributed capital of $750,000 and 50,000 no par, $ 0.40, preferred shares issued at $5 each. It declared and paid a cash dividend in the current year of $125,000. Dividends had been declared every year except for the two years prior to the current year. Assume for this question only that the preferred shares were non-cumulative and non-participating. How much will each shareholder group receive?

Select one:

a.

$31,250 to Preferred and $93,750 to Common.

b.

$25,000 to Preferred and $100,000 to Common as the common carry more risk and so should be paid at least as much as the preferred and paid before the preferred since the preferred are non-participating.

c.

$60,000 to Preferred and $65,000 to Common.

d.

$61,250 to Preferred and $63,750 to Common.

e.

None of the above.