Answer:
a. $6.00
Step-by-step explanation:
Earnings per share on common stock or preferred stock is both after providing for interest and tax expense, therefore earnings per share of $10 would increase owner's equity by $10
100,000 shares = $1,000,000
Provided net increase recorded in equity = $400,000
Thus dividend paid = $1,000,000 - $400,000 = $600,000
Dividend per share = $600,000/100,000 = $6 per share.
Interest paid by corporation B is not to be considered as this is paid before calculating Earnings per share.
Correct option is
a. $6.00