A firm with a simple capital structure had a net income of 7,700 last year. It had 1,000 common shares outstanding and its reported EPS was 6.6. What was the firm's payment to its preferred stock holders?
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A. B. C. D.C
For a simple capital structure, EPS = (Net Income - Preferred stock dividends)/weighted # of common shares This gives 6.6 = (7700- Preferred stock dividends)/1000. Hence, payment to preferred equity holders = 1,100.