A company has £1,000,000, equity shares at a nominal value of £1.00 each and 100,000 5% preference shares at a nominal value of 50p each. The directors decide to pay a dividend of 5p per equity share.
The total amount to be paid in dividends in the year amounts to:

Question

Quizplus · Accepted Answer

The total dividend payment is calculated by adding the dividend for equity shares and preference shares. For equity shares: 1,000,000 shares * £0.05 = £50,000. For preference shares: 100,000 shares * £0.025 (5% of 50p) = £2,500. Adding both gives £52,500, but since the option is not available, the closest correct option based on the provided choices is C) £55,000, indicating a possible mistake in the question or the options provided.

A Company Has £1,000,000, Equity Shares at a Nominal Value