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Patch Garden plans to distribute $150 000 in dividends. It has 20,000 7 per cent preferred...

Patch Garden plans to distribute $150 000 in dividends. It has 20,000 7 per cent preferred share (cumulative) originally issued at $10 and 60 000 ordinary shares. How much will be distributed per share on preferred and ordinary shares?

Preferred shares $1.68; Ordinary shares $1.68

Preferred shares $3.35; Ordinary shares $1.12

Preferred shares $0.70; Ordinary shares $2

Preferred shares $0.70; Ordinary shares $2.26

Solutions

Expert Solution

Preferred shares $0.70; Ordinary shares $2.26

Working:

Step-1:Calculation of dividend payable to shareholders

Dividend payable to preferred shareholders

Number of Preferred Shars x Face Value per Share x Dividend Rate

20,000

$ 10

$ 14,000

Total Dividend Declared

$ 1,50,000

Less:Dividend payable to preferred shareholders

$ 14,000

Dividend payable to ordinary shareholders

$ 1,36,000

Step-2:Calculation of Dividend per Share

Total Dividend

Number of shares

Dividend Per Share

a/b

Preferred Shares

$ 14,000

20000

$ 0.70

Ordinary Shares

$ 1,36,000

60000

$ 2.27

ekkarill92 answered 1 year ago

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