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Seventy-Two Inc., a developer of radiology equipment, has stock outstanding as follows: 80,000 shares of cumulative preferred 3% stock, $20 par and 400,000 shares of $25 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $36,000; second year, $72,000; third year, $80,000; fourth year, $100,000. Determine the dividends per share on each class of stock for each of the four years.

Respuesta :

TomShelby

Answer:

1st year:

preferred stock 0.45

2nd Year:

preferred 0.75

common 0.03

3rd Year:

preferred 0.48

common 0.08

4th Year:

preferred 0.48

common 0.13

Explanation:

80,00 x 3% x $20 = 48,000

First year:

36, 000 preferred stock

36,000 / 80,000 = 0.45

Second Year

72, 000 - 48,000 - 12,000 = 12,000 common stock

60,000 preferred stock

DPS preferred 60,000/80,000 = 0.75

common 12,000/400,000 = 0.03

Third Year

80, 000

DPS preferred 48,000 preferred/80,000 = 0.6

DPS common 32,000 common/400,000 = 0.08

Fourth Year:

100,000

DPS preferred 48,000 preferred/80,000 = 0.6

DPS common 52,000 common/400,000 = 0.13

The dividends per share on each class of stock for each of the four years are:

1st year:

cumulative preferred stock 0.45

2nd Year:

cumulative preferred stock 0.75

common 0.03

3rd Year:

cumulative preferred stock 0.48

common 0.08

4th Year:

cumulative preferred stock 0.48

common 0.1

Dividend per share for cumulative preferred stock:

[tex]\begin{aligned}\text{Dividend Par Share} = \frac{\text{Amount of dividend}}{\text{Number of stock}}\end{aligned}[/tex]

1st year:

[tex]\begin{aligned}\frac{\$36000}{80000} = 0.45\end{aligned}[/tex]

2nd year:

[tex]\begin{aligned}\frac{\$60000}{80000} = 0.75\end{aligned}[/tex]

3rd year:

[tex]\begin{aligned}\frac{\$48000}{80000} = 0.6\end{aligned}[/tex]

4th year:

[tex]\begin{aligned}\frac{\$48000}{80000} = 0.6\end{aligned}[/tex]

Dividend per share for common stock:

1st year:

0.00

2nd year:

[tex]\begin{aligned}\frac{\$12000}{400000} = 0.03\end{aligned}[/tex]

3rd year:

[tex]\begin{aligned}\frac{\$32000}{400000} = 0.08\end{aligned}[/tex]

4th year:

[tex]\begin{aligned}\frac{\$52000}{400000} = 0.13\end{aligned}[/tex]

Note: Calculation for the preferred stock of 2nd year:

[tex]\begin{aligned}\text{Dividend for cumulative preferred share}&= \text{Number of shares}\times \text{interest rate}\times \text{per unit of price}\\&= \$80,000 \times 3\%\times\$20\\&=\$48,000 \end{aligned}[/tex]The preferred stock is calculated by subtracting the given amount of dividend and the calculated amount of dividend.

To know more about the calculation of dividends, refer to the link below:

https://brainly.com/question/14159928?referrer=searchResults

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