1. Jackson Corporation had the following net income in years 1-3:

   Year 1 = $10,000

   Year 2 = $25,000

   Year 3 = $65,000

   There are 100,000 shares of 6%, $5 par value preferred stock and 50,000 shares of

   $2 par value common stockholders. Jackson decides to pay out all their net income in

   dividends. How much in dividends is paid to preferred stockholders in year 1 assuming the preferred stock is cumulative?

   	a.	$30,000
   	b.	$20,000
   	c.	$10,000
   	d.	$40,000

2 points

QUESTION 25

1. Referring to the previous question, how much in dividends would be paid to preferred stockholders in year 2?

   	a.	$30,000
   	b.	$25,000
   	c.	$55,000
   	d.	$35,000

2 points

QUESTION 26

1. What are the two classes of stock?

   	a.	Common and special
   	b.	Yours and mine
   	c.	Cumulative and non-cumulative
   	d.	Common and preferred

3 points

QUESTION 27

1. There are 20,000 shares of $5 par value common stock before a 2 for 1 split. How many shares of common stock are there after the split and what is the par value per share?

   	a.	40,000 shares at $5 per share
   	b.	40,000 shares at $2.50 per share
   	c.	10,000 shares at $2.50 per share
   	d.	10,000 shares at $5 per share