Folic Acid, Inc., has $20 million in earnings, pays $2.75 million in interest to bondholders, and $1.80 million in dividends to preferred stockholders.

Folic Acid, Inc., has $20 million in earnings, pays $2.75 million in interest to

bondholders, and $1.80 million in dividends to preferred stockholders.

a. What are the common stockholders’ residual claims to earnings?

b. What are the common stockholders’ legal, enforceable claims to dividends?

Folic Acid, Inc., has $20 million in earnings, pays $2.75 million in interest to bondholders, and $1.80 million in dividends to preferred stockholders.