Question

Salmon, Inc. issues 505,000 shares of preferred stock for $35 a share. The stock has a fixed annual dividend rate of 5% and a par value of $14 per share. The current price of the preferred stock is $37 a share. If sufficient dividends are declared, preferred stockholders can anticipate receiving annual dividends of:

A. $0.70 per share.

B. $1.75 per share.

C. $1.85 per share.

D. $1.05 per share.

Answer 1

Answer: A. $0.70 per share.

Step-by-step explanation:

Answer 2

A. $0.70 per share.

Step-by-step explanation:

Calculation for preferred stockholders anticipation of receiving annual dividends

Annual dividends= Par value × Fixed Annual dividend rate

Let plug in the formula

Annual dividends= $14 per share × 0.05

Annual dividends= $0.70 per share

Therefore If sufficient dividends are declared, preferred stockholders can anticipate receiving annual dividends of:$0.70 per share