To determine the dividends per share for preferred and common stock for each year, we need to use the following formulas:
Dividends per share of preferred stock = Total dividends on preferred stock / Number of outstanding shares of preferred stock
Dividends per share of common stock = Total dividends on common stock / Number of outstanding shares of common stock
First, we need to calculate the total dividends on preferred and common stock for each year:
Year 20Y1:
Total dividends on preferred stock = 25,000 shares x $50 par x 2% = $25,000
Total dividends on common stock = $37,500
Year 20Y2:
Total dividends on preferred stock = $25,000 (cumulative preferred stock) + $20,000 x 2% = $25,400
Total dividends on common stock = $20,000
Year 20Y3:
Total dividends on preferred stock = $25,000 (cumulative preferred stock) + $20,000 (cumulative preferred stock) + $30,000 x 2% = $26,600
Total dividends on common stock = $75,000
Using the formulas above, we can calculate the dividends per share for each year:
Year 20Y1:
Dividends per share of preferred stock = $25,000 / 25,000 shares = $1.00
Dividends per share of common stock = $37,500 / 50,000 shares = $0.75
Year 20Y2:
Dividends per share of preferred stock = $25,400 / 25,000 shares = $1.02
Dividends per share of common stock = $20,000 / 50,000 shares = $0.40
Year 20Y3:
Dividends per share of preferred stock = $26,600 / 25,000 shares = $1.06
Dividends per share of common stock = $75,000 / 50,000 shares = $1.50
Therefore, the dividends per share for preferred and common stock for each year are as follows:
Year 20Y1: Preferred stock = $1.00, Common stock = $0.75
Year 20Y2: Preferred stock = $1.02, Common stock = $0.40
Year 20Y3: Preferred stock = $1.06, Common stock = $1.50