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

Multiple Choice

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 ________.

A) $1,000,000
B) $210,000
C) $790,000
D) $1,265,823