Question

g On January 1, 2019 FirstEnergy Corp issued 19,000 shares of $100 par, 8%, cumulative, preferred stock for $110 per share. No dividends have been paid to preferred or common shareholders. What amount of dividends will a preferred shareholder owning 100 shares receive in 2021 if FirstEnergy pays $1,000,000 in dividends

Answer 1

Answer: $2640

Step-by-step explanation:

Based in the information given,

Par value of preferred stock = $110

Rate of dividend = 8%

Therefore, the preferred dividend per share will be:

= $110 × 8%

= $110 × 0.08

= $8.80

It should be noted that the cumulative dividend from 2019 to 2021 will be for 3 years. Therefore, the dividend to 100 preferred shareholder in 2021 will be:

= 100 × $8.80 × 3

= $2640