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Question(s) / Instruction(s):

A company has 1,000 shares of $50 par value, 4.5% cumulative and nonparticipating preferred stock and 10,000 shares of $10 par value common stock outstanding. The company paid total cash dividends of $1,000 in its first year of operation. The cash dividend that must be paid to preferred stockholders in the second year before any dividend is paid to common stockholders is:

a)            $2,250.

b)            $3,500.

c)            $1,250.

d)            $4,500.

e)            $1,000.

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