Question

1a. Happy Corporation has issued 575,000 shares of common stock and 100,000 shares of cumulative preferred stock. Annual dividends on the cumulative preferred stock are $4 per share. Last year, dividends of $2.50 per share were paid to preferred stockholders. This year the company has $1,990,000 net income and the Board of Directors decide to distribute 60% of net income as dividends. If you own 300 shares of common stock in Happy Corporation, what will the total amount of your annual dividend be? Round your final answer to the nearest dollar.

$336

$750

$414

$783

1b.

You buy 200 shares of stock at a price of 38.50 and incur brokerage fees totaling $130. Calculate your total cost.

		$7,830
		$7,570
		$7,731
		$33,700

Answer 1

1a) Statement showing Dividend per share

Particulars	Amount
Net profit during the year	1990000
Amount to be distributed as dividend(1990000*60%)	1194000
Fixed dividend to preference share holders(100000*4)	400000
Balance to be distributed amoung equity share holders	794000
Total no of equity shares	575000
Dividend per share	1.38

If one hold 300 shares, then he will get 300*1.38 = 414$

ans 414$

1b)

Statement showing total cost

Particulars	Amount
Purchase of stock(200*38.5)	7700
Brokerage	130
Total cost	7830