Tri-State Industries has both common and noncumulative preferred stock outstandi

Question

Tri-State Industries has both common and noncumulative preferred stock outstanding. The dividends on these stocks are $1.35 each quarter for the common and $2.10 each quarter for the preferred. The company has not paid any dividends for the past three quarters but is expected to pay dividends on both the common and the preferred stock next week. What is the minimum amount the firm must pay per share to its preferred stockholders next week if it plans to pay a common dividend?

A)$8.40
B)$2.10
C)$4.20
D)$6.30
E)$0

Explanation / Answer

D. $6.30

Working: Dividend on Preferred Shares = $2.10 Per Share Per quarter

Unpaid dividend = 3 Quarters

Total unpaid Dividend = 2.10 x 3 = $ 6.30 Per Preferred Share

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