Answer:
Importance : Opportunity cost is lost Contribution
Effect : Opportunity cost increases the variable costs of the decision that has been chosen
Explanation:
Opportunity Cost is a lost contribution. Contribution is calculated as Sales less Variable Costs.
Considering opportunity costs is very relevant to a firm because it constitutes part of the money lost that cold have been earned when another alternative course of action is chosen over another. The opportunity cost would have been the revenue for the disregarded option.
So opportunity cost increases the variable costs of the decision that has been chosen.
Costs that can be traced to a cost object in a cost-effective way are called direct costs.
a) true
b) false
Answer:
a) true
Explanation:
Costs that can be traced to a cost object in a cost-effective way are called direct costs. Sometimes they can literally be seen on the cost object by observation. For example the wood on the table.
Waterway Industries purchased machinery for $905000 on January 1, 2017. Straight-line depreciation has been recorded based on a $52000 salvage value and a 5-year useful life. The machinery was sold on May 1, 2021 at a gain of $13000. How much cash did Waterway receive from the sale of the machinery?
Answer:
$ 178,733
Explanation:
From January 2017 when the machinery was acquired till May 1 2021 when it disposed of, depreciation would have been charged for full years 2017,2018,2019 and 2020 while 2021 depreciation would only be for 4 months.
Annual depreciation=cost-salvage value/ useful life
annual depreciation=($905000-$52000)/5=$170,600
depreciation for 4 years=$170,600*4=$682,400
depreciation for 4 months=$170,600*4/12=$56,867
accumulated depreciation=$682,400+$56,867=$739,267
carrying value=cost-accumulated depreciation= $905000- $739,267 =$165,733
gain on disposal=cash proceeds-carrying value
$13000=cash proceeds-$165,733
cash proceeds=$165,733 +$13000=$ 178,733
Carter's preferred stock pays a dividend of $1.40 per quarter. If the price of the stock is $69.00, what is its nominal (not effective) annual expected rate of return?
Answer:
Carter's preferred stock nominal annual expected rate of return is 8.12%.
Explanation:
Nominal annual expected rate of return of a preferred stock can be described as the current or unadjusted rate of return of the stock.
The nominal annual expected rate of return can be calculated as follows:
Nominal annual expected rate of return = Annual preferred stock dividend per share / Preferred stock price ............. (1)
Where;
Annual preferred stock dividend per share = Dividend per quarter * 4 = $1.40 * 4 = $5.60
Preferred stock price = $69.00
Substituting the values into equation (1), we have:
Nominal annual expected rate of return = $5.60 / $69.00 = 0.0812, or 8.12%
Therefore, Carter's preferred stock nominal annual expected rate of return is 8.12%.
Naomi complains to Andy that he "hasn’t been here – until now, when we’re in crisis mode." Based on this statement, Andy is most likely viewed as a(n) ________ leader by Naomi.
a. passive management by exception
b. active management by exception
c. transformational
d. laissez-faire
e. contingent reward
Answer: a. passive management by exception
Explanation:
Even though this might sound like it is laissez-faire leadership, it is not.
This is a passive management by exception leadership style and a leader that does this is usually inactive and absent from their duties unless mistakes are being made or crisis are popping up that need to be fixed. They will then spring into action to mitigate the adverse effects of their absence.
This is different from laissez-faire leadership because in laissez-faire, the leader is simply absent even during crisis.
Based on the given statement, it is the passive management by exception that leader by Naomi.
The following information should be considered related to the passive management by exception :
In this, the leader is not active also it is absent from the duties until the mistakes should be made or the crisis should be popping up the requirement to be fixed. After this, there is the transformation of the spring into action for decreasing the opposite impacts.Therefore we can conclude that the correct option is a.
Learn more: brainly.com/question/16115373
EXERCISE 5–2 Prepare a Cost-Volume-Profit (CVP) Graph LO5–2 Karlik Enterprises distributes a single product whose selling price is $24 per unit and whose variable expense is $18 per unit. The company’s monthly fixed expense is $24,000. Required: 1. Prepare a cost-volume-profit graph for the company up to a sales level of 8,000 units. 2. Estimate the company’s break-even point in unit sales using your cost-volume-profit graph.
Answer:
Cost volume profit analysis (CVP) refers basically to determining the break-even point of a company and how we can use that information to predict how different changes might affect it. When you are performing a CVP analysis you have to decide which variables will be constant, i.e. ceteris paribus, and which will be altered to predict the effect on the company’s operating income.
1)
sales level total revenue variable costs fixed costs total costs
2,000 48,000 36,000 24,000 60,000
4,000 96,000 72,000 24,000 96,000
6,000 144,000 108,000 24,000 132,000
8,000 192,000 144,000 24,000 168,000
2) break even point = 4,000 units
sales level total revenue variable costs fixed costs total costs
2,000 48,000 36,000 24,000 60,000
4,000 96,000 72,000 24,000 96,000
6,000 144,000 108,000 24,000 132,000
8,000 192,000 144,000 24,000 168,000
2) thus, reach point = 4,000 units
Find out more information about cost-volume here:
https://brainly.com/question/11510153
The separation of the ownership of the firm from the control of the firm leads to: ____________
a. debt financing.
b. an agency problem.
c. depreciation.
d. equity financing.
Answer:
D. Equity financing
Explanation:
Hope this helps!
If the net present value of a project is positive (non-zero), then the project's:________.a) PI will be less than 1. b) internal rate of return will exceed its required rate of return. c) costs exceed its benefits. d) discounted payback period will exceed the life of the project. e) payback period must equal the life of the project.
Answer:
b) internal rate of return will exceed its required rate of return.
Explanation:
The internal rate of return is the discount rate at which the NPV = 0. If the NPV is positive when calculated using the project's discount rate, then the IRR is going to be higher than the discount rate.
Option A is wrong because the profitability index (PI) of a project is calculated by dividing the present value of its cash flows by its cost. If the NPV is positive, it means that the present value of its cash flows will be greater than the costs, so the pI will be more than 1.
Option C is wrong because if the costs exceed the benefits, then the NPV will be negative.
Option D is wrong because that would mean that the NPV is negative.
Option E is something made up that doesn't make any sense.
Which type of supply chain collaboration includes collaborative processes across the supply chain using a set of processes and technology models including a joint business plan, sales forecasting, order planning and forecasting, order generation, and order fulfillment?
Answer:
Collaborative Planning, Forecasting and Replenishment (CPFR)
Explanation:
Supply chain management can be defined as the effective and efficient management of the flow of goods and services as well as all of the production processes involved in the transformation of raw materials into finished products that meet the insatiable want and need of the consumers. Generally, the supply chain management involves all the activities associated with planning, execution and supply of finished goods and services to the consumers.
The fundamental principle of supply chain management is basically a collaboration between multiple firms. These multiple firms include a company that is saddled with the responsibility of manufacturing, a wholesaler, and a retailer who typically sells the products to the customers or consumers.
Basically, these three (3) firms or individuals are required to collaborate with each other so as to meet the needs of the customers in a timely manner or fashion and at a fair price too.
Collaborative Planning, Forecasting and Replenishment (CPFR) is a type of supply chain collaboration which includes collaborative processes across the supply chain using a set of processes and technology models including a joint business plan, sales forecasting, order planning and forecasting, order generation, and order fulfillment.
What would be the approximate expected price of a stock when dividends are expected to grow at a 25% rate in each of years 2 and 3, and then grow at a constant rate of 5% if the stock's required return is 13% and next year's dividend will be $4.00?
Answer:
$68.64
Explanation:
Div₁ = $4
Div₂ = $5
Div₃ = $6.25
Div₄ = $6.5625
the terminal value at year 3 = Div₄ / (Re - g) = $6.5625 / (13% - 5%) = $82.03
P₀ = $4/1.13 + $5/1.13² + ($6.25 + $82.03)/1.13³ = $88.28/1.13³ = $68.64
A potential obligation that depends on the future outcome of past events is a contingent liability. true false
Answer:
TRUE
Explanation:
A potential obligation that depends on the future outcome of past events is a contingent liability!
- An obligation is something that is to be done
- A potential obligation is a thing or activity that is among the options of stuff that can be done
- When something depends on the future outcome of past events, it introduces or carries with it, the cost of waiting (for future outcomes)
- A contingent liability is something that poses probability of loss instead of gain. The opposite of liability is asset.
So in business, a potential obligation or action that depends on the future outcome of past events is a contingent loss rather than gain.
On January 15, 2021, James Company received a two-month, 4%, $7,000 note from Peter Long for the settlement of his open account. The entry by Jaymes Company on January 15, 2016 would include a:________
a. debit of $7,047 to Notes Receivable.
b. debit of $7,000 to Notes Receivable.
c. credit of $7.047 to Accounts Receivable.
d. credit of $7,000 to Notes Receivable,
Answer: b. debit of $7,000 to Notes Receivable.
Explanation:
James Company received a Note Receivable of $7,000 from Peter Long to settle the Receivable account so Notes Receivable will increase. As it is an asset, it will be debited when it increases so Note Receivable has to be debited $7,000.
Accounts Receivable will be credited with the same $7,000 indicate that the Receivables account has been settled by the Note.
The entry would include debit of $7,000 to Notes Receivable.
Here, James Company received a Note Receivable of $7,000 from Peter Long to settle the Receivable account, hence, the Notes Receivable will increase.
Since the Notes Receivable is an asset, it will be debited when it increases, thus, Note Receivable has to be debited with the amount of $7,000.
However, the Accounts Receivable will be credited with $7,000 to show that the Receivables account has been settled by the Note.
Hence, the Option B is correct because the entry by Jaymes Company on January 15, 2016 would include debit of $7,000 to Notes Receivable.
See similar solution here
brainly.com/question/14580323
1. You have a portfolio that is invested 21% in Stock A, 34% in Stock B, and 45% in Stock C. The betas of the stocks are .66, 1.21, and 1.50, respectively. What is the beta of the portfolio? a. 1.17.b. 1.12.c. 1.38.d. 1.00.e. 1.23.2. The risk-free rate is 3.7% and the market expected return is 11.6%. What is the expected return of a stock that has a beta of 1.22?
Answer:
1.
Portfolio Beta = 1.225 rounded off to 1.23
Option e is the correct answer.
2.
r = 0.13338 or 13.338% rounded off to 13.34%
Explanation:
1.
The portfolio beta is a function of the weighted average of the individual stocks' betas that form up the portfolio. To calculate the beta of a portfolio, we use the following formula,
Portfolio Beta = wA * Beta of A + wB * Beta of B + ... + wN * Beta of N
Where,
w is the weight of each stock
Portfolio Beta = 0.21 * 0.66 + 0.34 * 1.21 + 0.45 * 1.5
Portfolio Beta = 1.225 rounded off to 1.23
2.
Using the CAPM, we can calculate the required rate of return on a stock. This is the minimum return required by the investors to invest in a stock based on its systematic risk, the market's risk premium and the risk free rate.
The formula for required rate of return under CAPM is,
r = rRF + Beta * (rM - rRF)
Where,
rRF is the risk free rate
rM is the market return
r = 0.037 + 1.22 * (0.116 - 0.037)
r = 0.13338 or 13.338% rounded off to 13.34%
In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are:_______.A. Complements and the higher price for oil increased the demand for natural gas. B. Complements and the higher price for oil decreased the supply of natural gas. C. Substitutes and the higher price for oil increased the demand for natural gas. D. Substitutes and the higher price for oil decreased the supply of natural gas. E. Unrelated and the prices of both products increased because of increased reliance on fossil fuels.
Answer:
C. Substitutes and the higher price for oil increased the demand for natural gas.
Explanation:
In 2007, the price of oil increased, which in turn caused the price of natural gas to rise. This can best be explained by saying that oil and natural gas are substitutes and the higher price for oil increased the demand for natural gas.
Substitute goods are goods that can be used in place of another good because they serve the same purposes.
The demand for goods is said to be elastic, when the quantity of goods demanded by consumers with respect to change in price is very large. Thus, the more easily a consumer can switch to a substitute product in relation to change in price, the greater the elasticity of demand.
Generally, consumers would like to be buy a product as its price falls or become inexpensive.
For substitute products (goods), the price elasticity of demand is always positive because the demand of a product increases when the price of its close substitute (alternative) increases.
Click this link to view O*NET's Work Activities section for Architects. Note that common activities are listed toward the
top, and less common activities are listed toward the bottom. According to O*NET, what are common work activities
performed by Architects? Check all that apply.
repairing and maintaining mechanical equipment
communicating with persons outside of the organization
drafting, laying out, and specifying technical devices, parts, and equipment
using dynamic flexibility to repeatedly bend, stretch, or twist with arms or legs
using night vision and peripheral vision
making decisions and solving problems
thinking creatively
Answer:
communicating with persons outside of the organization
drafting, laying out, and specifying technical devices, parts, and equipment
making decisions and solving problems
thinking creatively
B, C, F, G
Explanation:See attachment
A company reported the following amounts and balances: Beginning capital balance $45,000, Net Sales $420,000, Cost of Goods Sold $273,000, Total Expenses $112,000, Net Income $35,000, Ending Cash Balance $22,000, Withdrawals $7,200, Ending Accounts Receivable $27,000. What is the Ending Capital Balance?
a. $94,600
b. $38,200
c. $72,800
d. $49,600
Answer:
c. $72,800
Explanation:
ending capital balance = beginning capital balance + net income - withdrawals = $45,000 + $35,000 - $7,200 = $72,800
Ending capital balance refers to total owners' capital balance after the accounting period is closed. Net income increases owners' capital while withdrawals or dividends decrease it.
Wexim Toys sold merchandise to a customer on credit, terms 2/10, n/30 for $11,700. Three days later, the customer returned $2,300 of the merchandise. When recording the return transaction, Wexim Toys would record:__________
a) $2,300 in the Accounts Payable Cr. column and $2,300 in the Inventory Dr. column of the purchases journal. b) Debit Sales Returns and Allowances $2,300 and credit Accounts Receivable $2,300 in the general journal. c) $2,300 in the Cash Dr. column and $2,300 in the Inventory Cr. column in the cash receipts journal. d) Debit Cash $2,300 and credit Inventory $2,300 in the general journal. e) $2,300 in the Accounts Payable Dr. column and $2,300 in the Cash Cr. column of the cash payments journal.
Answer:
b) Debit Sales Returns and Allowances $2,300 and credit Accounts Receivable $2,300 in the general journal.
Explanation:
When goods were sold on account, Accounts receivables is debited, and Sales is credited. When goods are returned, Sales Return & Allowances is debited, and Accounts receivables is credited.
Thus, the entry will include Debit in Sales Returns and Allowances $2,300 and Credit in Accounts Receivable $2,300
what is your view about credit cards in America? Do you think it serves the best interest of Americans or not and why?
A firm is deciding between two different sewing machines. Technology A has fixed costs of $500 and marginal costs of $50 whereas Technology B has fixed costs of $250 and marginal costs of $100. At what quantity is the firm indifferent between the two technologies?
Answer: 5 units
Explanation:
Use equations.
Cost of Producing with Tech A;
= 500 + 50Q
Cost of Producing with Tech B;
= 250 + 100Q
Point of indifference;
500 + 50Q = 250 + 100Q
500 - 250 = 100Q - 50Q
50Q = 250
Q = 5 units
Question 16 of 20
Frank just met with his marketing team to create his billboard sign. So far, he
knows the billboard will have a catchy slogan, a brief description about the
company and what makes them different, and information directing
customers to visit his website. What element of an effective advertisement is
Frank's billboard missing?
A. Unique selling proposition
B. Call to action
C. Appropriate information
O D. Exciting graphics and color
Answer:
b. call to action
Explanation:
An element of an effective advertisement is Frank's billboard missing is Call to action. Thus the correct option is B.
What is advertisment?An advertisement is referred tool of promotion to create awareness of any product among customers and persuade them to make a purchase which helps in the sales of the product.
In this paragraph, it is described that Billboards have a catchy slogan that gets successful gets the attention of the customer, and influences them to make a visit to their website.
The element of effective advertising which the billboard is missing is a call to action that encourages customers to take action of buying. Here Billboards is unable to tell a story to engage customers so that they will not turn their actions of buying.
Therefore, option B is appropriate.
Learn more about Advertisement, here:
https://brainly.com/question/3163475
#SPJ5
You use ________________ to communicate a risk and the resulting impact.A. risk management plansB. CBAsC. risk statementsD. POAMs
Answer:A
Explanation:
At an output level of 17,500 units, you have calculated that the degree of operating leverage is 3.26. The operating cash flow is $78,000 in this case. Ignore the effect of taxes. What will be the new degree of operating leverage for 18,500 units and 16,500 units? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) DOL at 18,500 units DOL at 16,500 units
Answer:
DOL at 18,500 = 2.91 DOL at 16,500 = 3.78Explanation:
First find out the Contribution margin per unit and the fixed costs to enable you calculate the profit for the 18,500 units and the 16,500 units.
DOL = Contribution Margin/ Profit
3.26 = Contribution Margin/ 78,000
Contribution Margin = 3.26 * 78,000
= $254,280
Per unit = 254,280/17,500 = $14.53
Fixed Costs = Contribution - Profit
= 254,280 - 78,000
= $176,280
DOL at 18,500 units.
Profit = (14.53 * 18,500) - fixed costs of $176,280
= $92,525
DOL = Contribution/ Profit
= (14.53 * 18,500) / 92,525
= 2.91
DOL at 16,500 units.
Profit = (14.53 * 16,500) - 176,280
= $63,465
DOL = (14.53 * 16,500) / 63,465
= 3.78
Alison was just hired around the Grand Stores. She soon learned that all new hires in the company are required to go through mandatory health and drug testing. She consulted her superiors and found that this was not a breach of her privacy right. Which reason for such testing would NOT qualify as a breach of Alisons privacy rights?
A. Pre-employment condition
B. Vacation allotment
C. Fitness for duty
D. Personality assessment
Answer:
A. Pre-employment condition
Explanation:
The answer is A. because if the testing is a requirement for getting the job then you know beforehand. You're aware of this requirement before they employ you so it's not breaching your privacy rights.
Answer:
a
Explanation:
The company can allow whoever they want into the company and it is their choice to test their employees for drugs.
The PE ratio: Assuming Net Income for the year is $250,000, what is the net cash flows from operating activities given the following information: Increase in Salaries Payable $ 19,500 Depreciation Expense $ 9,500 Increase in Prepaid Rent $ 27,500 Loss on sale of asset $ 1,250 Increase in Accounts Payable $ 29,500 Increase in Inventory $ 93,000 Multiple Choice
Answer:
Net operating cash flow = $189,250
Explanation:
Particulars Amount$
Net income 250,000
Add:depreciation expense 9,500
Add:loss on sale of asset 1,250
Add:increase in salary payable 19,500
Less:increase in prepaid rent (27,500)
Add:increase in AP 29,500
Less:increase in inventory (93,000)
Net operating cash flow $189,250
Anthony currently earns $25 an hour and works 40 hours a week. When his boss offers to pay him $29 per hour, Anthony decides to accept the offer, but decides to keep working 40 hours. What is the effect of Anthony's decision on the labor supply curve?
Answer:
substitution and income effects will counteract each other totally
Explanation:
A labor supply curve is an economic analysis tool that shows the number or workers that are available to work or that can work at various wage rates.
The labor supply curve can either be bending backwards or sloping downwards or upward curving but it shows the relationship between labour and wage rates.
A labor supply curve can be affected by factors such as population, changes in social behaviour, opportunities in other markets, among other things.
From the above question, it is seen that a change in wage rate for Anthony from $25 to $29 does not affect his work hours positively of negatively. His work hours is the same despite the increase in hourly wage.
The effect of the Anthony sticking to 40 hours of work despite an increase in wage, which could have served as some motivation for him to put in more hours is his labor curve remains same. An increase in wage has done noting to affect the number of hours he works and as such his income vs work rate counters each other.
Cheers.
Why would an e-mail rule memo like this work better as an innovation-driven company such as Tesla rather than at a manufacturing-driven company such as General Motors
Answer:
An e-mail rule memo like this work better as an innovation-driven company such as Tesla rather than at a manufacturing-driven company such as General Motors is discussed below in details.
Explanation:
The general motor is a very large business in each department with numerous tiers of hierarchy. then departments of the hierarchy are likely to report each other. the company's overall structure is very bureaucratized. one of the disadvantages is that when it comes to decision making and policymaking. General Motors are a slow-moving business. However, this bureaucracy is required by the big organizational structure to keep it together.
Tesla is a business that is younger and relatively lower than General motors because of this general motor funds are likely to be lacking but they are agile and that is their benefit.
An e-mail rule is a rule that determines the better way to mail the messages formally or informally. Tesla is a business that is younger and relatively lower than General motors because of this general motor funds are likely to be lacking but they are agile and that is their benefit.
The reason e-mail rule memo works better as compared to innovation-driven is:
The general motor holds a very large economic activity in each department with numerous tiers of hierarchy and then these departments of the hierarchy are likely to report each other, the company's overall structure is very bureaucratized. One of the disadvantages of this is that when it comes to decision making and policymaking. General Motors are a slow-moving business. However, this bureaucracy is required by the big organizational structure to keep it together.
To know more about the general motors and the tesla motors, refer to the link below:
https://brainly.com/question/19509195
(Cost of debt) Sincere Stationery Corporation needs to raise $500,000 to improve its manufacturing plant. It has decided to issue a $1,000 par value bond with a 14 percent annual coupon rate and a 10-year maturity. The investors require a 9 percent rate of return. a. Compute the market value of the bonds. b. What will the net price be if flotation costs are 10.5 percent of the market price?
Answer:
a. $1,320.88
b. $1,182.19
Explanation:
The computation is shown below:
a. For market value of the bond
Given that
Rate = 9%
NPER = 10
PMT = $1,000 * 14% = $140
FV = $1,000
The formula is shown below:
= -PV(RATE;NPER;PMT;FV;TYPE)
After applying the above formula, the present value is $1,320.88 i.e. equivalent to the market value of the bonds
b. Now the net price be
= Market price × (1 - flotation cost)
= $1,320.88 × (1 - 0.105)
= $1,182.19
Demand forecasting is the process of creating statements about ____________ of demand that are ______________.
a. future realizations, currently uncertain
b. current uncertainties, future realized
c. current realizations, future realized
d. future uncertainties, currently realized
Answer:
a. future realizations, currently uncertain
Explanation:
Demand forecasting is the process where the demand is forecasted based on the past sales so that the estimation of the customer demand could be done. It tells the value of the goods and services that the customer will buy in near future
So according to the given options, the first option is correct as it is based on the future i.e. totally uncertain
Therefore the first option is to be chosen
Which are Career and Technical Student Organizations? (Check all that apply.)
Business Professionals of America
American Association of School Administrators
American Chemical Society
UDECA
Future Business Leaders of America
FFA
Skills USA
FCCLA
Will give brainliest! 50 points!!!
Answer:
Answer:
Business Professionals of America
American Association of School Administrators
DECA
Future Business Leaders of America
Explanation:
Hope it helps your question!
Answer:
A,B,D,E
Explanation:
A ball rolls across a floor with an acceleration of 0.100 m/s2 in a direction opposite to its velocity. The ball has a velocity of 4.00 m/s after rolling a distance 6.00 m across the floor. What was the initial speed of the ball?a. 4.15 m/s.
b. 5.85 m/s.
c. 4.60 m/s.
d. 5.21 m/s.
e. 3.85 m/s.
Answer:
a. 4.15 m/s.
Explanation:
Given the following data;
Acceleration, a = -0.100 because it's in the opposite direction.
Final velocity = 4
Distance = 6
To find the initial velocity of the ball, we would use the third equation of motion;
[tex] V^{2} = U^{2} + 2aS [/tex]
Where;
V represents the final velocity measured in meter per seconds. U represents the initial velocity measured in meter per seconds. a represents acceleration measured in meters per seconds square. S represents the displacement measured in meters.[tex] V^{2} = U^{2} + 2aS [/tex]
Making U the subject, we have;
[tex] U^{2} = V^{2} - 2aS [/tex]
Substituting into the equation, we have;
[tex] U^{2} = 4^{2} - 2*(-0.100)*(6) [/tex]
[tex] U^{2} = 16 + 1.2 [/tex]
[tex] U^{2} = 17. 2[/tex]
Taking the square root of both sides;
U = 4.147m/s ≈ 4.15m/s
Therefore, the initial speed of the ball is 4.15m/s.
Howard Company has 10,000 shares of $200 par value, 6% cumulative preferred stock and 150,000 shares of $50 par value common stock. Howard declares and pays cash dividends amounting to $800,000. If no arrearage on the preferred stock exists, how much in total dividends is paid to each class of stock
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.