Reference no: EM132756524

Problem 1: Preferred Stock, with a par value of $100 per share and a 9% dividend rate, is listed on the balance sheet at $1,000,000. If dividends are declared and paid at the end of the year, and dividends are 3 years in arrears, what amount will the preferred shareholders receive before common shareholders are paid any dividend?

A. $200,000

B. $270,000

C. $360,000

D. $400,000

E. $480,000

Problem 2: Preferred Stock, $100 par, callable at $105, totals $500,000. Common Stock totals $500,000 and Additional Paid-in Capital is $100,000. Retained Earnings totals $250,000. If there are no dividends in arrears, what is the book value per share of the preferred stock?

A. $100 per share

B. $102 per share

C. $108 per share

D. $110 per share

E. None of the above