Hancock Corporation is Publishing Company. The Hancock Family formed this corporation in colonial times more than 200 years ago. The stock (400 shares of $1 par common stock) has remained in the hands of the Hancock Family for all of that time. In recent years, the Company has experienced the need for additional paid in capital. The Company has formulated a plan to issue 20,000 shares of 4% $50 par preferred stock. The stock will be issued at par value resulting in an additional $1 million of paid in capital. The preferred stock is cumulative and non-voting.

Is this plan ethical? How much will the preferred dividends be each year? What is the advantage for the Hancock Family? If the Hancock Corporation pays out $100,000 in dividends, how much per share will go to the preferred stockholders and how much per share will go to the common stockholders?