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Compute for the dividends for preferred shares

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Reference no: EM132490033

The following information pertains to SBA Company for year-end 2016.

Earnings before interest and taxes = P 3,000,000

Capital structure consists of the following:

Debts - 1,000 , 15%, P 5,000 value per bond,

Preferred Shares - 12%, 5,000, P1000 par

Ordinary equity shares - 10,000 shares , P100 par

Corporate Tax rate - 32%

For 2016, 60% of Earnings after interest and taxes will be distributed as dividends .

Assume that interest, taxes, dividends are paid annually.

Question a. Compute for the EAIT.

Question b. Compute for the dividends for preferred shares; for common shares.

Question c. How much of the EAIT were added to retained earnings account.

Reference no: EM132490033

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