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A firm with a simple capital structure had a net income of 7,700 last year. It had 1,000 common shares outstanding and its reported EPS was 6.6. What was the firm's payment to its preferred stock holders?
A. 1,200
B. 0
C. 1,300
D. 1,100
Answer: D
For a simple capital structure, EPS = (Net Income - Preferred stock dividends)/weighted # of common shares This gives 6.6 = (7700- Preferred stock dividends)/1000. Hence, payment to preferred equity holders = 1,100.

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