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Lightfoot Inc., a software development firm, has stock outstanding as follows: 15,000 shares of cumulative preferred...

Lightfoot Inc., a software development firm, has stock outstanding as follows: 15,000 shares of cumulative preferred 4% stock, $25 par, and 19,000 shares of $50 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $5,700; second year, $9,450; third year, $44,860; fourth year, $66,110.

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 (dividend per share) $ $ $ $
Common stock (dividend per share) $ $ $ $

Solutions

Expert Solution

  • All working forms part of the answer
  • Workings

Par Value per Preferred Share

Dividend rate

Dividend per Preferred Share

No. of Preferred Shares

Preferred Dividend

Annual Preferred Dividend:

$                          25

4.00%

$                   1.000

                    15,000

$            15,000.00

Total Cash Dividend paid

Paid to Preferred

Paid to Common

Dividends in Arrears at Year end

Year 1

$              5,700.00

$             5,700.00

$                          -  

$             9,300.00

Year 2

$              9,450.00

$             9,450.00

$                          -  

$          14,850.00 [9300 + (15000-9450)]

Year 3

$            44,860.00

$           29,850.00 [14850 + 15000]

$           15,010.00

$                          -  

Year 4

$            66,110.00

$           15,000.00

$           51,110.00

$                          -  

TOTAL

$          126,120.00

$           60,000.00

$           66,120.00

$                          -  

  • Answers

1st year

2nd year

3rd year

4th year

Preferred Dividend:

A [calculated above]

Total

$                 5,700.00

$            9,450.00

$         29,850.00

$        15,000.00

B = A/ 15000 shares

Dividend per share [ANSWER]

$                         0.38

$                    0.63

$                   1.99

$                   1.00

Common Stock Dividend:

C [calculated above]

Total

$                              -  

$                         -  

$         15,010.00

$        51,110.00

D = C/19000 shares

Dividend per share [ANSWER]

$                              -  

$                         -  

$                   0.79

$                   2.69

ekkarill92 answered 2 years ago
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