Answer:
A. Preferred total = $9,900, preferred per share = $0.99.
Common stock total dividend = $62,100, dividend per share = $1.63
B. Preferred total = $29,700, preferred per share = $0.99.
Common stock total dividend = $42,300, dividend per share = $1.11
Explanation:
A. If the preferred stock is non-cumulative :
Preferred stock has a rate of 11% and par value of $9.
Dividend per share = 11% * $9 = $0.99
Total dividend payable to preferred shareholders = dividend per share * number of shares outstanding
= 0.99 * 10000
= $9900
We subtract $9900 from the total dividend declared to get the total dividend payable to common stockholders.
Common dividend = 72000 - 9900 = $62100
Divided per share = 62100/38000
= $1.63
B. If the preferred stock is cumulative :
Since the preferred dividend was not paid during the previous two years, we add the two years to the current year.
Total annual dividend payable to preferred shareholders = $9900
Total outstanding = 9900 * 3 = 29,700
Subtract 29,700 from the proposed dividend to obtain the total dividend payable to common stockholders.
Common dividend payable = 72000 - 29700 = $42,300
Dividend per share = 42300/38000
Dividend per share = $1.11
