Question

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Dividends Per Share Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 81,700...

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) $ $ $ $

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:

$                          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


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