Fairmount Inc., a developer of radiology equipment, has stock outstanding as fol

Question

Fairmount Inc., a developer of radiology equipment, has stock outstanding as follows: 13,000 shares of cumulative preferred 1% stock, $120 par, and 43,000 shares of $15 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $10,400; second year, $14,560; third year, $45,920; fourth year, $82,680. Calculate the dividends per share on each class of stock for each of the four years. Round all answers to two decimal places. If no dividends are paid in a given year, enter "0".

Explanation / Answer

Hi,

The correct answers are as follows:

Dividends per share for the first year:

DPS = 10400/(13000+43000)

=$0.19

Dividends per share for the second year:

DPS = 14560/(13000+43000)

=$0.26

Dividends per share for the third year:

DPS = 45920/(13000+43000)

=$0.82

Dividends per share for the fourth year:

DPS = 82680/(13000+43000)

=$1.48

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