Question

Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 60,000 shares of cumulative preferred 3% stock, $20 par and 410,000 shares of $25 par common.

During its first four years of operations, the following amounts were distributed as dividends: first year, $33,000; second year, $73,000; third year, $90,000; fourth year, $110,000.

Determine 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 "0.00".

Answer 1

Dividend per share is the amount paid to each shareholder.

Preference stock dividend = 60,000 * 20 * 3% = 36,000

	Year 1	Year 2	Year 3	Year 4
Dividend distributed	33,000	73,000	90,000	110,000
Preferred stock	33,000	39,000	36,000	36,000
Common stock	0.00	34,000	54,000	74,000

Dividend per share

Preferred stock - 60,000 shares

Common stock - 410,000 shares

DPS	Year 1	Year 2	Year 3	Year 4
Preferred stock	0.55	0.65	0.6	0.6
Common stock	0.00	0.08	0.13	0.18

Preferred stock - is a stock that provides a fixed amount of return , that is dividend, to its stockholder before paying dividends to common stockholder .

A cumulative preferred stock means a stockholder is entitled to receive dividends for the current year plus any unpaid dividends of the previous year before dividend paid to the common stockholder.