A corporation has $10,000,000 of 10 percent preferred stock outstanding and a 21 percent tax rate.The amount of earnings before interest and taxes (EBIT)required to pay the preferred dividends is ________.

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The amount of EBIT required to pay the preferred dividends is $1,265,823. This is calculated as follows:Preferred dividends = $10,000,000 * 10% = $1,000,000EBIT required to pay preferred dividends = $1,000,000 / (1 - 21%) = $1,265,823

A Corporation Has $10,000,000 of 10 Percent Preferred Stock Outstanding