Dividends Per Share

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 400,000 shares of $25 par common.

During its first four years of operations, the following amounts were distributed as dividends: first year, $31,000; second year, $74,000; third year, $90,000; 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

Total yearly distribution payouts to the share classes would be as follows assuming a full dividend. If you need help finishing your homework by figuring out the ACTUAL per share dividend or the why and math behind it let me know and we can arrange to get together. I'm done with my morning coffee so must get to work.

NOTE: These are NOT the correct amounts. I'm just trying to nudge you in the correct direction and show you the pattern of what it would look like. Understanding the definition of cumulative preferred shares and how they work vs common stock is the key to unlocking the answer.

YR 1: CPS 3% $48,000 + $5,166, CS $25,833

YR 2: CPS 3% $48,000 + $12,333, CS $61,666

YR 3: CPS 3% $48,000 + $15,000, CS $75,000

YR 4: CPS 3% $48,000 + $16,666, CS $83,333

Cheers!