Dividends on Preferred and Common Stock Love Theatre Inc. owns and operates movi
ID: 2487407 • Letter: D
Question
Dividends on Preferred and Common Stock
Love Theatre Inc. owns and operates movie theaters throughout New Mexico and Utah. Love Theatre has declared the following annual dividends over a six-year period: 2011, $36,000; 2012, $108,000; 2013, $162,000; 2014, $198,000; 2015, $252,000; and 2016, $315,000. During the entire period ending December 31 of each year, the outstanding stock of the company was composed of 30,000 shares of cumulative, 3% preferred stock, $100 par, and 100,000 shares of common stock, $15 par.
Required:
1. Calculate the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears on January 1, 2011. Summarize the data in tabular form. If required, round your answers to two decimal places. If the amount is zero, please enter "0".
2. Calculate the average annual dividend per share for each class of stock for the six-year period. If required, round your answers to two decimal places.
3. Assuming a market price per share of $174 for the preferred stock and $20 for the common stock, calculate the average annual percentage return on initial shareholders' investment, based on the average annual dividend per share for preferred stock and for common stock.
Round your answers to two decimal places.
Preferred Dividends Common DividendsYear Total
Dividends
Total
Per Share
Total
Per Share 2011 $ 36,000 $ $ $ $ 2012 108,000 2013 162,000 2014 198,000 2015 252,000 2016 315,000 $ $
Explanation / Answer
Love Theatre Inc Details No of stock Par Total Par % Dividend Yearly Dividend Preferred stock 30,000 100 3,000,000 3% 90,000 Common stock 100,000 15 1,500,000 Preference dividend Common stock Dividend Year Total Dividend dividend paid-Preferred Dividend per share Toatl Amt in arrear dividend paid-common Dividend per share Year 2011 36,000 36,000 1.20 54,000 - - Year 2012 108,000 108,000 3.60 36,000 - - Year 2013 162,000 126,000 4.20 - 36,000 0.36 Year 2014 198,000 90,000 3.00 - 108,000 1.08 Year 2015 252,000 90,000 3.00 - 162,000 1.62 Year 2016 315,000 90,000 3.00 - 225,000 2.25 Total 540,000.00 18.00 531,000.00 5.31 Average Per year 90,000.00 3.00 88,500.00 0.89 Details Preference share Common Share Average annual Dividend per share 3.00 0.89 Market Price /share 174 20 Average annual % return of initial investment 1.72% 4.43%