Question

Suppose Global Cable has declared a dividend of $2,500,000. The company has 240,000 shares of preferred stock that pay $2.10 per share and 2,600,000 shares of common stock. After finding the amount of dividends due the preferred shareholders, calculate the dividend per share of common stock.

Answer 1

Answer:

$0.7676

Step-by-step explanation:

Dividend declared = $2,500,000.

Total shares of preferred stock = 240,000

Each share costs $2.10

So, Total cost of shares of preferred stock = 240,000×2.10

       Dividend due to the preferred shareholders  = $504,000.

Now,

Total shares of common stock = 2,600,00

Cost of shares of common stocks = Total dividend - Total cost of shares of

                                                                                       preferred stock

                                                           = $2,500,000-504,000

                                                           = $1,996,000

Dividend per share of common stock =$ $\frac{1,996,000}{2,600,000}$

                                                              = $0.7676