Dividends for redeemable preference shares

Hello Sir , What is the bases for calculating the dividends for redeemable preference shares ,should it be paid by the declared dividends or their percentage they hold like in the following qusetion.Instead of calculating the dividencds based on declared 50cents per share it was calculated as 100,000shares x 20% Can you clarify please Sir, Thanks, ----------------------------------- Q The following scenario relates to question 26 - 30 Data Co has completed its IPO in the current year. The business is process of preparing its consolidated financial statements for the year ended 31 December 2017. The following information is relevant for the purpose of calculating EPS: Logs Co Logs Co is a wholly owned subsidiary of Data Co. The business was acquired five years ago. During the year ended 31 December 2017, Logs Co earned a net profit of $200,000. It paid dividends of $8,000 on redeemable preference shares and dividends of $10,000 on irredeemable preference shares. The business issued 5,000 ordinary shares five years ago and no shares have been issued since then. Precise Co Precise Co is another wholly owned subsidiary of Data Co. Precise Co has issued share capital of 200,000 ordinary shares of $1 each and 100,000 20% redeemable preference shares of $1 each. During the year ended 31 December 2017, Precise Co earned a gross profit of $1 million. And the operating expenses were $200,000. Precise Co declared the required dividend on preference shares and ordinary dividends of 50c per share. The taxation rate is 30%. Byron Co Byron Co is an associate of Data Co. The net profit of Byron Co for the year ended 31 December 2016 and 31 December 2017 was $500,000 and $400,000 respectively. At the beginning of 2016, Byron Co had 100,000 shares in issue. The business made a 1 for 5 rights issue on 1 April 2017 at a price of $2. The market value of each share before issuance, with the knowledge of the rights, was $3.20. 28. Calculate the earnings per share (EPS) of Precise Co for the year ended 31 December 2017. A) $2.73 B) $2.86 C) $2.92 D) $2.23 ----------------------------------------------------- Answer 28. A Gross profit $ 1,000,000 Operating expenses ($200,000) Preference dividends ($20,000) Profit before tax $780,000 Tax at 30% (234,000) Net profit $546,000 EPS = $546,000 / 200,000 EPS = $2.73