Question

At December 31, 2021 and 2022, Frist Company had outstanding 50 million common shares and 4 million shares of 10%, $10 par cumulative preferred stock. Net income for 2022 was $20 million. No dividends were declared in 2022. EPS for 2022 was: rev: 03_01_2021_QC_CS-255248 Multiple Choice $0.32. $0.37. $0.40. $0.48.

Answer 1

The dividend is a payout of profits from a firm to its investors. As long as a corporation makes a profit or surplus, it can distribute a part of that profit to shareholders. Any money left over is re-invested money into the organization. So, the answer is "$\bold{\ 0.32}$" and its calculation can be defined as follows:

Given:

The Net income for $\bold{2022= \ 20\ million}$

Common shares = $4 \ million$

share= $10\%$

Cumulative preferred stock= $\ 10$

$\to \bold{\frac{[\ 20 - (10\% \times \ 10\ par \times 4)]}{50}}\\\\\to \bold{\frac{[\ 20 - (0.10 \times \ 40\ par)]}{50}}\\\\\to \bold{\frac{[\ 20 - \ 4\ par]}{50}}\\\\\to \bold{\frac{[\ 16]}{50}}\\\\\to \ 0.32$

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