D is corrent. The requirement is to determine the amount to be paid to the stockholders at the end of the fifth year. The amount paid to stockholders should be $4,500,000 plus the interest earned during each of the five years. Using simple interest, the interest can be calculated as $4,500,000 X 10% = $450,000 each year X 5 years = $2,250,000 interest. The total amount due to the stockholders for the scrip dividend is $4,500,000 + $2,250,000 interest = $6,750,000.
A is incorrect. The requirement is to determine the amount to be paid to the stockholders at the end of the fifth year. The amount paid to stockholders should be $4,500,000 plus the interest earned during each of the five years. Using simple interest, the interest can be calculated as $4,500,000 X 10% = $450,000 each year X 5 years = $2,250,000 interest. The total amount due to the stockholders for the scrip dividend is $4,500,000 + $2,250,000 interest = $6,750,000.
A is incorrect. The requirement is to determine the amount to be paid to the stockholders at the end of the fifth year. The amount paid to stockholders should be $4,500,000 plus the interest earned during each of the five years. Using simple interest, the interest can be calculated as $4,500,000 X 10% = $450,000 each year X 5 years = $2,250,000 interest. The total amount due to the stockholders for the scrip dividend is $4,500,000 + $2,250,000 interest = $6,750,000.
A is incorrect. The requirement is to determine the amount to be paid to the stockholders at the end of the fifth year. The amount paid to stockholders should be $4,500,000 plus the interest earned during each of the five years. Using simple interest, the interest can be calculated as $4,500,000 X 10% = $450,000 each year X 5 years = $2,250,000 interest. The total amount due to the stockholders for the scrip dividend is $4,500,000 + $2,250,000 interest = $6,750,000.
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