Problem $13-9$ Preferred stock

In $2021,$ Beta Corporation earned gross profits of $$860,000.$

a$.$ Suppose that Beta was financed by a combination of common stock and $$1\mathrm{.}16$ million of debt. The interest rate on the debt was

$10\%,$ and the corporate tax rate in $2021$ was $21\%.$ How much profit was available for common stockholders after payment of

interest and corporate taxes?

b$.$ Now suppose that instead of issuing debt, Beta was financed by a combination of common stock and $$1\mathrm{.}10$ million of preferred

stock. The dividend yield on the preferred was $8\%,$ and the corporate tax rate was still $21\%.$ Recalculate the profit available for

common stockholders after payment of preferred dividends and corporate taxes.

Note: Do not round intermediate calculations. Enter your answers in dollars not millions and round your answers to the

nearest whole dollar amount.

a$.$ Profit available to common stockholders

b$.$ Profit available to common stockholders