Question

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As of January 2016,  Magna Refrigeration Co has 6% Preferred stock, $100 par value 10,000 shares  issued and outstanding; Common stock, $5 par value, 100,000 shares  issued and outstanding.(50 points)
The following dividends  were declared and paid  in 2016, 2017 and 2018
2015	No dividends were declared and paid
·         2016	$15,000
·         2017	$40,000
·         2018	$110,000
a)    Assuming the preferred stock were non-cumulative, how much dividends did preferred and common stockholders receive for each year dividends were declared.
b)  Calculate Dividend Per Share for each year
c)    Assuming the preferred stock were cumulative, how much dividends did preferred and common stockholders receive for each year dividends were declared.
d)  Calculate Dividend Per Share for each year

Answer 1

a) If preferred stock are non cumulative

	Total dividend	Preferred dividend	Preferred dividend per share	Common Dividend	Common Dividend per share
2015	0	0	0	0	0
2016	15000	15000	15000/10000 = 1.50	0	0
2017	40000	40000	40000/10000 = 4	0	0
2018	110000	50000	50000/10000 = 5	60000	60000/100000 = 0.60
Total	165000	105000		60000

Annual preferred dividend = 10000*100*5% = 50000

b) If preferred stock are cumulative

	Total dividend	Preferred dividend	Preferred dividend per share	Common Dividend	Common Dividend per share
2015	0	0	0	0	0
2016	15000	15000	15000/10000 = 1.50	0	0
2017	40000	40000	40000/10000 = 4	0	0
2018	110000	110000	110000/10000 = 11	0	0
Total	165000	165000		0