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VikaD [51]
2 years ago
10

Comparing Stock and Cash Dividends

Business
1 answer:
den301095 [7]2 years ago
4 0

Answer:

Case A: We have:

Total preferred stock dividend = $12,000

Preferred stock dividend per share = $1.50 per share

Total common stock dividend = $19,000

Common stock dividend per share = $0.54 per share

Case B: We have:

Total preferred stock dividend = $36,000

Preferred stock dividend per share = $4.50 per share

Total common stock dividend = $0

Common stock dividend per share = $0 per share

Case C: We have:

Total preferred stock dividend = $36,000

Preferred stock dividend per share = $4.50 per share

Total common stock dividend = $54,000

Common stock dividend per share = $1.54 per share

Explanation:

Cumulative preferred stock is a type of preferred stock that gives the holder the opportunity to be paid any missed dividends whenever dividends are declared.

Noncumulative preferred stock is a type of preferred stock that does NOT give the holder the opportunity to be paid any missed dividends whenever dividends are declared.

Given the above explanation, we can now proceed as follows:

Case A: The preferred stock is noncumulative; the total amount of all dividends is $31,000.

Total preferred stock dividend = Preferred stock annual dividend = Dividend rate * Preferred stock value = 10% * $120,000 = $12,000

Preferred stock dividend per share = Total preferred stock dividend / Number of preferred stock outstanding = $12,000 / 8,000 = $1.50 per share

Total common stock dividend = Total amount of all dividends - Total preferred stock dividend = $31,000 - $12,000 = $19,000

Common stock dividend per share = Total common stock dividend / Number of common stock outstanding = $19,000 / 35,000 = $0.54 per share

Case B: The preferred stock is cumulative; the total amount of all dividends is $36,000.

Note: Since no dividends were declared during the previous two years, this implies cumulative preferred stock dividends have to be paid for the two previous and the current year making it three years.

Therefore, we have:

Preferred stock annual dividend = Dividend rate * Preferred stock value = 10% * $120,000 = $12,000

Total preferred stock dividend = Preferred stock annual dividend * 3 = $12,000 * 3 = $36,000

Preferred stock dividend per share = Total preferred stock dividend / Number of preferred stock outstanding = $36,000 / 8,000 = $4.50 per share

Total common stock dividend = Total amount of all dividends - Total preferred stock dividend = $36,000 - $36,000 = $0

Common stock dividend per share = Total common stock dividend / Number of common stock outstanding = $0 / 35,000 = $0 per share

Case C: The preferred stock is cumulative; the total amount of all dividends is $90,000.

Note: Since no dividends were declared during the previous two years, this implies cumulative preferred stock dividends have to be paid for the two previous and the current year making it three years.

Therefore, we have:

Preferred stock annual dividend = Dividend rate * Preferred stock value = 10% * $120,000 = $12,000

Total preferred stock dividend = Preferred stock annual dividend * 3 = $12,000 * 3 = $36,000

Preferred stock dividend per share = Total preferred stock dividend / Number of preferred stock outstanding = $36,000 / 8,000 = $4.50 per share

Total common stock dividend = Total amount of all dividends - Total preferred stock dividend = $90,000 - $36,000 = $54,000

Common stock dividend per share = Total common stock dividend / Number of common stock outstanding = $54,000 / 35,000 = $1.54 per share

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8 0
3 years ago
On April 1, Garcia Publishing Company received $33,480 from Otisco, Inc. for 36-month subscriptions to several different magazin
allochka39001 [22]

Answer:

Unearned Fees A/c Dr.  $8,370;

Fees Earned A/c  Cr. , $8,370.

Explanation:

The amount of  $33,480  paid is for 36 months.  Subscription per months will be $33,480 divided by 36 months

=$33,480 / 12

=$930

The subscription was paid on April 1st. Between April 1st and December 31st, there were 9 months.

The subscriptions for that year will be

= $930 x 9

=$8,370

The journal entries will be as follow

Unearned Fees A/c Dr.  $8,370;

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3 0
3 years ago
Consider the multi-factor APT with two factors. The risk premiums on the factor 1 and factor 2 portfolios are respectively 5% an
Llana [10]

Answer:

Option (B) 5.5%

Explanation:

Data provided in the question :

Factor             Risk premium

Factor 1               5%

Factor 2              3%

Beta of stock A on factor 1 = 1.4

Beta of stock A on factor 2 = 0.5

Expected return = 14%

Now,

Expected return

= Risk free rate + (Beta of factor 1 × Risk premium of factor 1) + (Beta of factor 2 × Risk premium of factor 2)

or

14% = Risk free rate + (1.4 × 5%) + (0.5 × 3%)

or

14% = Risk free rate + ( 7% + 1.5% )

or

Risk free rate = 5.5%

Hence,

Option (B) 5.5%

6 0
3 years ago
QUESTION 11 Given the following information, calculate the equity dividend rate for this investment: first-year NOI: $18,750; be
Alja [10]

Answer: D. 2.2%

Explanation: Equity Dividend Rate is calculated by dividing the Before Tax Cash Flow by the Acquisition price. If you need the answer in percentage form, you then multiply by 100.

Here, before-tax cash flow =  $11,440

Acquisition price = $520,000

So Equity Dividend Rate = \frac{11440}{520000} X 100

     Equity Dividend Rate = 2.2%

In this question, you do not need the Net Operating Income (NOI). You only need the NOI if the Before Tax Cash Flow is not given and the debt service payment is. If this is the case, you subtract the debt service payment from the NOI to get the Before Tax Cash Flow.

4 0
3 years ago
Rocky River Company is a pricetaker and uses target pricing. Refer to the following information:Production volume 602,000​ units
ladessa [460]

Answer:

$30.07

Explanation:

Rocky river company uses target pricing

The production volume is 602,000 units

The market price is $34 per unit

The total assets is $13,900,000

The desired operating income is 17% of the total assets

= 17/100 × 13,900,000

= 0.17×13,900,000

= 2,363,000

The first step is to calculate the sales value

= 602,000 ×34

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The total cost can be calculated as follows

= Sales value-desired operating income

= 20,468,000-2,363,000

= 18,105,000

Therefore the target full product cost per unit can be calculated as follows

= Total cost/production volume

= 18,105,000/602,000

= $30.07

Hence the full target product cost per unit is $30.07

7 0
3 years ago
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