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11 January, 05:46

Lightfoot Inc., a software development firm, has stock outstanding as follows: 25,000 shares of cumulative preferred 3% stock, $25 par, and 31,000 shares of $100 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $7,250; second year, $11,750; third year, $62,360; fourth year, $104,000. Calculate 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 "0".

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  1. 11 January, 05:51
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    Answer and Explanation:

    The computation of the dividend per share for each class of stock for four years are as follows

    Preferred stock

    = 25,000 shares * $25 * 3%

    = $18,750

    The dividend per share is

    = $18,750 : 25,000 shares

    = $0.75

    Now for the first year

    = $7,250 : 25,000

    = $0.29

    And the 0 is for Common stockholders

    For the second year

    Preferred stock

    = $11,750 : $25,000

    = $0.47

    And the 0 is for Common stockholders

    For the third year

    Preferred stock

    = $0.46 + $0.28 + $0.75

    = $1.49

    And for the Common stockholders

    = $27,900 : 31,000 shares

    = $0.9

    For the fourth year

    Preferred stock = $0.75

    And, for the common stockholders

    = $94,860 : 31,000 shares

    = $3.06
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