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The board of directors of DDC omitted dividends in 2016 on their $100 par 6% noncumulative preferred stock. In 2017, a $2 preferred dividend was paid. For DDC, 2018 has been a good year, and the board wishes to pay a common dividend. How much must be paid per share on the preferred for 2018 in order to pay a common dividend

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abiolataiwo2015

Answer:

$6

Explanation:

Calculation for the amount to be paid per share on the preferred for 2018 in order to pay a common dividend.

Using this formula

Common dividend=Omitted dividend *noncumulative preferred stock

Where,

Omitted dividend =$100

Noncumulative preferred stock=6%

Let plug in the formula

Common dividend =$100*6%

Common dividend =$6

Therefore the amount to be paid per share on the preferred for 2018 in order to pay a common dividend will be $6 per share.

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