Question

Imaging Inc., a developer of radiology equipment, has stock outstanding as follows: 23,000 shares of cumulative preferred 4% stock, $150 par, and 77,000 shares of $25 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $92,460; second year, $193,540; third year, $240,940; fourth year, $270,440. Compute 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 (dividend per share) $ $ $ $ Common stock (dividend per share) $ $ $ $

Answer 1

	Dividend on preferred shares
	23,000*4%*150
	138000
	First year
	dividend to preferred stock =			92460/23000
				4.02	per share
	Second year
	Dividend to preferred shareholders
	Arrear in dividend (138000-92460)=					45540
	Dividend to preferred shareholders					138,000
	total dividend to preferred shareholders					183540
	dividend per share =		183540/23000
			7.98
	Dividend to common shareholders (193540-183540)
				10000
				0.13
	Third year
	dividend to preferred shareholders = 138000/23000
				6
	dividend to common shareholders = (240,940 - 138000)/77000
				1.34
	Fourth year
	Dividend to preferred shareholders = $6 per share
	dividend to common shareholders = (270,440-138000)/77000
				1.72
					preferred	Common
					dividend	dividend
					per share	per share
	First year				4.02	0
	second year				7.98	0.13
	third year				6	1.34
	Fourth year				6	1.72