Problem: A corporation has 100,000 shares of 7 percent cumulative preferred stock and 40,000 shares of common stock outstanding.Par value for each is $10. no dividends were paid last year, but this year a $150,000 dividend is paid.
1) How much of this $150,000 goes to the holders of preferred stock?
2) Assume the same facts as in question above, except that the preferred stock is non-cumulative. How much of the $150,000 now goes to the holders of the common stock?