Question

Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 80,000 shares of cumulative preferred 3% stock, $20 par and 405,000 shares of $25 par common.

During its first four years of operations, the following amounts were distributed as dividends: first year, $30,000; second year, $74,000; third year, $100,000; fourth year, $100,000.
Determine the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "0.00".

Answer 1

To calculate the dividends per share on each class of stock for each of the four years, divide the total dividends paid by the number of shares for each class of stock.

Step-by-step explanation:

To calculate the dividends per share on each class of stock for each of the four years, we need to divide the total dividends paid by the number of shares for each class of stock. Here are the calculations:

Year 1:
Total Dividends = Preferred Stock Dividends + Common Stock Dividends
= ($20 * 0.03 * 80,000) + ($30,000 * 405,000)
= $48,000 + $12,150,000
= $12,198,000
Dividends per Preferred Share = Total Dividends / Number of Preferred Shares
= $12,198,000 / 80,000
= $152.48
Dividends per Common Share = Total Dividends / Number of Common Shares
= $12,198,000 / 405,000
= $30.14

Repeat the above calculations for Years 2, 3, and 4, using the respective dividend amounts. Remember to round all answers to two decimal places.