Basic Economics help

Question

A corporation has 1,000 shares of preferred stock and 4,000 shares of common stock. The preferred stock has a prior claim to an annual $8 dividend. If the annual profits to be distributed for the first three years were $20,000, $35,000, and 60,000 respectively, how much would be distributed to preferred stock and common stock? Also, calculate the dividends per share.

Answer 1

There are 1,000 shares of preferred. They are entitled to the first 8,000 dollars. The balance goes to the common dividend. So in year 1 12k is allotted to common or $3 per share in year 2, 27k goes to common or 27/4 or 6.75 per share in the third year 52k is given to common or $13 per share