Question
Fritz Corporation has 600,000 shares of preferred stock and 1,800,000 shares of common stock. The cumulative preferred stock has a stated dividend of $2.50 per
Fritz Corporation has 600,000 shares of preferred stock and 1,800,000 shares of common stock. The cumulative preferred stock has a stated dividend of $2.50 per share. Under normal conditions, the company pays out 30% of earnings available to common shareholders, however, because of a severe recession, Fritz retained all earnings last two year and did not pay any dividends. This year, Fritz earned net income of $6.5 million.
Required
a) Calculate the dividend per share to be received by the common shareholders this year.
b) Explain how will answer differ if the preferred shares were non cumulative
please do it in 10 minutes will upvote
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