Question

Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 80,000 shares of cumulative preferred 4% stock, $15 par, and 399,000 shares of $26 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $55,800 ; second year, $76,500 ; third year, $81,100 ; fourth year, $101,400 . Calculate 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". 1st Year 2nd Year 3rd Year 4th Year Preferred stock (dividends per share) $ 0 $ 0 $ 0 $ 0 Common stock (dividends per share) $ 0 $ 0 $ 0 $ 0

Answer 1

preferred stocks (dividends per share)

• year 1 = $0.60
• year 2 = $0.60
• year 3 = $0.60
• year 4 = $0.60

common stocks (dividends per share)

• year 1 = 1.75¢ per share or $0.02
• year 2 = 7.14¢ per share or $0.07
• year 3 = 8.30¢ per share or $0.08
• year 4 = 13.38¢ per share or $0.13

Step-by-step explanation:

distributed dividends preferred stocks common stocks

year 1 = $55,000 $48,000 $7,000

year 2 = $76,500 $48,000 $28,500

year 3 = $81,100 $48,000 $33,100

year 4 = $101,400 $48,000 $53,400

preferred stocks' dividends = $15 x 4% x 80,000 stocks = $48,000

dividends per share = $15 x 4% = $0.60

common stocks' dividends = total dividends - preferred stocks' dividends

year 1 = 7,000 / 399,000 = 1.75¢ per share

year 2 = 28,500 / 399,000 = 7.14¢ per share

year 3 = 33,100 / 399,000 = 8.30¢ per share

year 4 = 53,400 / 399,000 = 13.38¢ per share