A company XYZ requires a total sum of $500K which may fetch a return of 10%. The company raises $500K in the following manner

When profit is to be paid, priority should be given to debenture holder, i.e.6% * $200k = $12k.

Then, it should be paid to preference share holder, i.e.8% * $100k =

b) Debenture holders- $12K, Preference shareholders-$8K, Equity holders-$30K

Profit -                                  50,000   -

To Debenture Holders-          12,000   (2,00,000*6%)

                                            38,000

To Pref. Stakeholders-         8,000     (1,00,000*8%)

Balance to Equity Holders     30,000

i.e, Equity share Holders will get15%((30,000/2,00,000)*100) of dividend.