Preferred stock-calculate dividend amounts
Response to the following problem:
Qamar, Inc., did not pay dividends in 2012 or 2013, even though 50,000 shares of its 7.5%, $50 par value cumulative preferred stock were outstanding during those years. The company has 600,000 shares of $2 par value common stock outstanding.
Required:
a. Calculate the annual dividend per share obligation on the preferred stock.
b. Calculate the amount that would be received by an investor who has owned 700 shares of preferred stock and 8,000 shares of common stock since 2011 if a $0.40 per share dividend on the common stock is paid at the end of 2014.