Dividends Per Share Imaging Inc., a developer of radiology equipment, has stock

Question

Dividends Per Share Imaging Inc., a developer of radiology equipment, has stock outstanding as follows: 16,000 shares of cumulative preferred 2% stock, $120 par and 53,000 shares of $10 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $25,760: second year, $61,040: third year, $85,560: fourth year, $126,910. Compute 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 "O" 1st Year 2nd Year Grd Year 4th Year Preferred stock (dividend per share) Common stock (dividend per share)

Explanation / Answer

preferred stock dividend 16000*2%*120 38400 since stocks are cumulative arrears on dividend will be accumulated year 1 dividend per share 25760/16000 1.61 Arrear = (38400-25760   = 12640 ) year 2 Dividend per share (12640+38400)/16000 3.19 dividend to common shareholders = 61,040 - (12640+38400) 10000 per share = 10,000/53000 0.19 year 3 dividend per share (preferred) 38400 so per share = 2.4 common (85560-38400)/53000 0.89 year 4 dividend per share (preferred) 38400 so per share = 2.4 common (126910-38400)/53000 1.67 1st 2nd 3 rd 4th year year year year Preferred stock(dividend per share) 1.61 3.19 2.4 2.4 common stock (dividend per share) 0 0.19 0.89 1.67

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