Michelangelo Inc., a software development firm, has stock outstanding as follows
ID: 2360147 • Letter: M
Question
Michelangelo Inc., a software development firm, has stock outstanding as follows: 25,000 shares of cumulative 4%, preferred stock of $25 par, and 31,000 shares of $75 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $9,500; second year, $13,250; third year, $80,770; fourth year, $122,030. (Calculate the dividends per share on each class of stock for each of the four years. Round all answers to the nearest cent. If no dividends are paid in a given year, enter "0".)Explanation / Answer
preferred has to get paid first and since cumulative paid up 20000 x 25 x .01 = 5000 for preferred dividends or 0.25/share 1: P= 0.15; C=0 2: P=0.20; C=0 3. P= 0.10 from year 1 + 0.05 from year 2 + 0.25 = 0.40; C=1.28 or 32000/25000 share 4. P= 0.25; C= 75000/25000= 3.00 preferred dividends are fixed and capped, common shares are not