Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 81,100 shares of cumulative...

Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 81,100 shares of cumulative preferred 2% stock, $15 par, and 400,100 shares of $25 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $55,500 ; second year, $77,500 ; third year, $80,500 ; fourth year, $100,900 .

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)	$	$	$	$

Expert Solution

	Par value per preferred share	Dividend rate	Dividend per preferred share	Number of preferred shares	Preferred dividend
Annual preferred dividend	$15	2%	15 x 2% = 0.30	81,100	81,100 x 0.30 = 24,330
Years	Total cash dividend paid (i)	Paid to preferred (ii)	Paid to common (i - ii)	Dividend in arrears at year end
1	55,500	24,330	31,170	0
2	77,500	24,330	53,170	0
3	80,500	24,330	56,170	0
4	100,900	24,330	76,570	0
	$314,400	$97,320	$217,080	0

·

	Preferred stock (Dividend per share)	Common stock (Dividend per share)
First year	$0.30	31,170/400,100 = $0.08
Second year	$0.30	53,170/400,100 = $0.13
Third year	$0.30	56,170/400,100 = $0.14
Fourth year	$0.30	76,570/400,100 = $0.19

·

	1st year	2nd year	3rd year	4th year
Preferred stock (dividends per share)	$0.30	$0.30	$0.30	$0.30
Common stock (dividends per share)	$0.08	$0.13	$0.14	$0.19

ekkarill92 answered 1 year ago

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