Question
Sakura Corporation (Sakura) has outstanding share capital consisting of 30,000 preferred shares and 70,000 common shares. The preferred shares carry a dividend of $8 per
Sakura Corporation (Sakura) has outstanding share capital consisting of 30,000 preferred shares and 70,000 common shares. The preferred shares carry a dividend of $8 per share and have a $100 stated value. The common shares have a book value of $2,800,000. Sakura has retained earnings of $1,000,000 that is to be paid out in dividends. The preferred shares have not received a dividend in the two years preceding the current year. Instructions:
a) Calculate the dividend to be paid to preferred and common shareholders, assuming the preferred shares are non-cumulative and non-participating.
b) Calculate the dividend to be paid to preferred and common shareholders, assuming the preferred shares are cumulative and non-participating.
c) Calculate the dividend to be paid to preferred and common shareholders, assuming the preferred shares are cumulative and participating.
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