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 $100 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, $65,150; fourth year, $113,610.

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 (dividend per share)	$	$	$	$
Common stock (dividend per share)	$	$	$	$

Answer 1

	1st year	2nd year	3rd year	4th year
Preferred stock(dividend per share)	$ 0.29	$ 0.47	$ 1.49	$ 0.75
Common stock (dividend per share)	$ 0	$ 0	$ 0.9	$ 3.06

Preferred stock has to get paid first and since cumulative paid up25000*25*0.03=$18750 for preferred dividend or $ 0.75 per share.

For the 1^st year preferred gets $ 0.29($7250/25000) and 0 for Common

For the 2^nd year preferred gets $ 0.47($ 11750/25000) and 0 for Common

For the 3^rd year preferred gets $ 0.46 from year1 +$ 0.28 from year 2+$ 0.75=$ 1.49 and for Common it is $ 0.9 ($27900/31000).

For the 4^th year preferred gets 0.75 and for Common it is $ 3.06($ 94860/31000)