Question

Alpha Corporation has 1,500 shares of $40 par, 7% cumulative preferred stock, and 2,200 shares of $10 par common stock. Alpha paid $10,000 in cash dividends, including one-year dividends in arrears to preferred stockholders. Common stockholders received

Answer 1

Annual preferred dividend = 0.07*40*1500 =$4,200

Since there was a one year dividend arrears to preferred stock holders, the total amount that goes to preferred stockholders = 4,200 + 4,200 (arrears of previous years) = 8,400

So common stockholders received = 10,000-8,400 = $1,600 in dividends

So dividend per share for common shareholders =1600/2200 = $0.727/share