Answer:
Check Explanation.
Explanation:
The following parameters are given for dividends of three years;
Year 1 = $497,000, Year 2 = $490,000 Year 3 = $524,000.
The number of shares= 48,000 of 7%, preferred stock = $100 par and 92,000 shares of $50 par common stock issued and outstanding.
Therefore,
Year one:
=> Amount Distributed = $497,000.
=> Preferred dividend = 48,000 × 7% × $100 = 336,000.
=> Common dividend = 497,000 - 336,000 = 161,000.
=> Preferred divided per share = 336,000/ 48,000 = $ 7.
=> Common dividend = Common dividend/ 92,000 shares = 161,000/ 92,000 shares =$ 1.75.
Year Two:
=> Amount Distributed = $490,000.
=> Preferred dividend = 48,000 × 7% × $100 = 336,000.
=> Common dividend = 490,000 - 336,000 = 113,000.
=> Preferred divided per share = 336,000/ 48,000 = $ 7.
=> Common dividend = Common dividend/ 92,000 shares = 113,000/ 92,000 shares =$1.23.
Year Three:
=> Amount Distributed = $524,000.
=> Preferred dividend = 48,000 × 7% × $100 = 336,000.
=> Common dividend = $524,000 - 336,000 = 188,000.
=> Preferred divided per share = 336,000/ 48,000 = $7.
=> Common dividend = Common dividend/ 92,000 shares = 188,000/ 92,000 shares =$2.04
