Torino Company has 2,000 shares of $20 par value, 6.0% cumulative and nonparticipating preferred stock and 20,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $2,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:

Multiple Choice

• $2,400.

• $4,800.

• $400.

• $2,000.

• $2,800.