Question

The board of directors of Midwest Foods has declared a dividend of $3,500,000. The company has 300,000 shares of preferred stock that pay $2.85 per share and 2,500,000 shares of common stock. After finding the amount of dividends due the preferred shareholders, calculate the dividend per share of common stock.

Answer 1

Answer:

$1,06

Explanation:

Calculation for dividend per share of common stock for board of directors of Midwest Foods

First step is to find the amount of dividends due to the preferred shareholders

Using this formula

Total Dividend =Dividend- (Preferred stock *Per share of preferred stock )

Let plug in the formula

Total Dividend =$3,500,000-($300,000*$2.85)

Total Dividend =$3,500,000-$855,000

Total Dividend =$2,645,000

The second step is to find Dividend per share of common stock

Using this formula

Dividend per share of common stock=Total dividend/Shares of common stock

Let plug in the formula

Dividend per share of common stock=$2,645,000/$2,500,000

Dividend per share of common stock=$1.06

Therefore the dividend per share of common stock for board of directors of Midwest Foods will be $1.06