National Health Corporation (NHC) has a cumulative preferred stock issue outstanding, which has a stated annual dividend of $8 per share. The company has been losing money and has not paid preferred dividends for the last five years. There are 330,000 shares of preferred stock outstanding and 630,000 shares of common stock.

a. How much is the company behind in preferred dividends?

Preferred dividends in arrears $

b. If NHC earns $12,500,000 in the coming year after taxes and before dividends, and this is all paid out to the preferred shareholders, how much will the company be in arrears (behind in payments)? Keep in mind that the coming year would represent the sixth year.

Amount still in arrears $