Question

Dividends Per Share

Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 81,700 shares of cumulative preferred 3% stock, $15 par, and 398,200 shares of $26 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $56,000 ; second year, $77,900 ; third year, $80,700 ; fourth year, $98,800 .

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	3.00%	$                   0.450	81,700	$            36,765.00

	Total Cash Dividend paid	Paid to Preferred	Paid to Common	Dividends in Arrears at Year end
Year 1	$            56,000.00	$           36,765.00	$           19,235.00	$                          -
Year 2	$            77,900.00	$           36,765.00	$          41,135.00	$                          -
Year 3	$            80,700.00	$           36,765.00	$           43,935.00	$                          -
Year 4	$            98,800.00	$           36,765.00	$          62,035.00	$                          -
TOTAL	$          313,400.00	$        147,060.00	$        166,340.00	$                          -

• Answer along with working

		1st year	2nd year	3rd year	4th year
	Preferred Dividend:
A [calculated above]	Total	$              36,765.00	$          36,765.00	$         36,765.00	$        36,765.00
B = A / 81700 shares	Dividend per share [ANSWER]	$                         0.45	$                    0.45	$                   0.45	$                   0.45
	Common Stock Dividend:
A [calculated above]	Total	$              19,235.00	$          41,135.00	$         43,935.00	$        62,035.00
B = A / 398200 shares	Dividend per share [ ANSWER]	$                         0.05	$                    0.10	$                   0.11	$                   0.16