Abc corp. has outstanding a 10% noncumulative $100 par preferred stock. two years ago, abc omitted its preferred dividend. last year, it paid a dividend of $5 per share. in order to pay a dividend to common shareholders, each preferred share must be paid a dividend of

face value of the share x return

100 face value  x 10% needed to make the business to continue operations.

Explanation:

To be able to pay the common stock the company must fill complete the payment on prefereed stocks.

In this case each stock is granted a 10% dividends.

the par value of the preferred stock is 100 so the interest payment will be:

$100 x 10% = $10

each preferred stock much receive this amount before considering the declaration of dividends to common stock. As the same implies, this shares are preferred. So picked over the common stock.

answeri believe this is (true );