Final answer:
The maximum payment to preferred stockholders of KUH&S Corp on a per-share basis for this year would be $5 per share since the cumulative preferred dividends exceed the company's earnings.
Step-by-step explanation:
The subject of this question pertains to Business, specifically to the area of corporate finance involving the distribution of profits through dividends to shareholders. The scenario involves KUH&S Corp, which has both preferred and common stock outstanding. The preferred stock is cumulative, which means that if any dividends are missed, they are accumulated and must be paid out before any dividends can be paid to common stockholders. Given that the preferred dividend is $3 per share and has not been paid for three years, and that the company earned one million dollars this year, we calculate the maximum payment to preferred stockholders on a per-share basis as follows:
Since the company earned only one million dollars this year, it cannot pay the total $2,400,000 that is due. The maximum payment to preferred stockholders on a per-share basis for this year would therefore be limited to the profit made, which is $5 per share ($1,000,000 / 200,000 shares).