Answer:
Dividend - Preferred stock = $120000
Dividend - Common stock = $680000
Explanation:
The amount of dividend that is paid to each class of stock can be calculated by first calculating the dividend payable to preferred stock. The amount of dividend on preferred stock is fixed and is paid before the common stockholders are paid. Thus, dividend on preferred stock per year is,
Dividend - Preferred stock = 10000 * 200 * 0.06 = $120000
Thus, out of $800000 cash dividends, $120000 will be paid on the cumulative preferred stock.
Remaining dividend = 800000 - 120000 = $680000
The remaining $680000 will be paid to the common stockholders.
