Question

Dividends Per Share Lightfoot Inc., a software development firm, has stock outstanding as follows: 25,000 shares of cumulative preferred 3% stock, $25 par, and 31,000 shares of $75 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $7,250; second year, $11,750; third year, $61,120; fourth year, $99,970. 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".

Preferred stock (dividend per share) Common stock (dividend per share)

1st Year

2nd Year

3rd Year

4th Year

Answer 1

	Dividends on Preferred Stock
	25000*3%*25
	18750
	!st year
	preferred dividend 7,250/25000
			0.29
	arrears in dividend = 18750-7250				11500
	2nd year
	preferred dividend = 11750/25000
			0.47
	Arrears in dividend		18750-11750=		7000
	3rd year
	preferred dividend
	dividend for current year				18,750
	1st year arrear				11,500
	2nd year arrear				7000
	total dividend paid in year 3rd				37,250
	number of shares				25,000
	Dividend per share				1.49
	Common shares   (61,120-37,250)/31000=				0.77
	4th year
	preferred stock divdiend (18750/25000)				0.75
	Common (99,970-18750)/31000				2.62
			preferred		common
	1st year		0.29		0
	2nd year		0.47		0
	3rd year		1.49		0.77
	4th year		0.75		2.62