Question

Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 80,100 shares of cumulative preferred 4% stock, $15 par, and 401,700 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, $76,400 ; third year, $80,100 ; fourth year, $98,700 .

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)	$	$	$	$
Common stock (dividends per share)	$	$	$	$

Answer 1

• 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:	$                          15	4.00%	$                   0.600	80,100	$            48,060.00

	Total Cash Dividend paid	Paid to Preferred	Paid to Common	Dividends in Arrears at Year end
Year 1	$            55,800.00	$           48,060.00	$             7,740.00	$                          -
Year 2	$            76,400.00	$           48,060.00	$           28,340.00	$                          -
Year 3	$            80,100.00	$           48,060.00	$           32,040.00	$                          -
Year 4	$            98,700.00	$           48,060.00	$           50,640.00	$                          -
TOTAL	$          311,000.00	$        192,240.00	$        118,760.00	$                          -

• Answers

		1st year	2nd year	3rd year	4th year
	Preferred Dividend:
A [calculated above]	Total	$              48,060.00	$          48,060.00	$         48,060.00	$        48,060.00
B = A /80,100 shares	Preferred STOCK Dividend per share = ANSWER	$                         0.60	$                    0.60	$                   0.60	$                   0.60
	Common Stock Dividend:
A [calculated above]	Total	$                 7,740.00	$          28,340.00	$         32,040.00	$        50,640.00
B = A / 401,700 shares	Common STOCK Dividend per share = ANSWER	$                         0.02	$                    0.07	$                   0.08	$                   0.13