Question

1) Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. Summarize the data in tabular form. If required, round your answers to two decimal places. If the amount is zero, please enter 0.

Preferred Dividends
a. 20Y1: Total Dividends = $32,000, Per Share = $1.6
b. 20Y2: Total Dividends = $64,000, Per Share = $3.2
c. 20Y3: Total Dividends = $144,000, Per Share = $7.2
d. 20Y4: Total Dividends = $176,000, Per Share = $4; Common Dividends = $80,000, Per Share = $0.96
e. 20Y5: Total Dividends = $232,000, Per Share = $4; Common Dividends = $80,000, Per Share = $1.52
f. 20Y6: Total Dividends = $288,000, Per Share = $4; Common Dividends = $80,000, Per Share = $2.08

Common Dividends
a. 20Y1: Total Dividends = $0, Per Share = $0
b. 20Y2: Total Dividends = $0, Per Share = $0
c. 20Y3: Total Dividends = $0, Per Share = $0
d. 20Y4: Total Dividends = $96,000, Per Share = $0.96
e. 20Y5: Total Dividends = $152,000, Per Share = $1.52
f. 20Y6: Total Dividends = $208,000, Per Share = $2.08

2) Determine the average annual dividend per share for each class of stock for the six-year period. If required, round your answers to two decimal places.

Average annual dividend for preferred: $4 per share
Average annual dividend for common: $0.76 per share
3) Assuming a market price per share of $189 for the preferred stock and $19 for the common stock, determine the average annual percentage return on initial shareholders’ investment, based on the average annual dividend per share (a) for preferred stock and (b) for common stock. Round your answers to two decimal places.

Preferred stock: %
Common stock: %

Answer 1

The given table provides the total and per-share dividends declared on each class of stock for six years. The average annual dividend per share is calculated for each class of stock. Finally, the average annual percentage return on initial shareholders' investment is determined based on the average annual dividend per share for each class of stock and the market prices per share.

Step-by-step explanation:

To determine the total dividends and per-share dividends declared on each class of stock for each of the six years, we can summarize the data in tabular form:

YearPreferred Total DividendsPreferred Dividends Per ShareCommon Total DividendsCommon Dividends Per Share20Y1$32,000$1.6$0$020Y2$64,000$3.2$0$020Y3$144,000$7.2$0$020Y4$176,000$4$80,000$0.9620Y5$232,000$4$80,000$1.5220Y6$288,000$4$80,000$2.08

The average annual dividend per share for preferred stock over the six-year period is $4, while for common stock it is $0.76.

To calculate the average annual percentage return on initial shareholders' investment, we need to know the market price per share for the preferred stock ($189) and the common stock ($19). The average annual percentage return for preferred stock is 2.12%, and for common stock it is 4%.