Raven Corporation Has 4

Multiple Choice

Raven Corporation has 4.8 million shares, 20% of which are cumulative preferred paying a fixed 5% of the $20 face value of the shares. The rest are common shares. Because of loan covenants, the company is restricted to paying out a maximum of 24% of its annual net income after tax in dividends or any dividends if after tax profit drops below $4.5 million. Over the past four years Raven has had net income after tax of $8 million, $6 million, $3 million, $6 million. What is the total value of dividends paid out to common shares in the past four years if the company tries to achieve a maximum payout?

A) $960,000
B) $1.2 million
C) $1.44 million
D) $2.16 million
E) $2.32 million