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: 25,000 shares of cumulative preferred 4% stock, $120 par, and 83,000 shares of $20 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $80,500; second year, $111,500; third year, $220,290; fourth year, $265,250.

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".

1st Year 2nd Year 3rd Year 4th Year Preferred stock (dividend per share) $ $ $ $ Common stock (dividend per share) $ $ $ $

Explanation / Answer

Calculate the dividends per share on each class of stock for each of the four years.

Preferred annual dividend = (25000*120*4%) = 120000

1st year 2nd year 3rd year 4th year Preferred stock (dividend per share) 80500/25000=3.22 111500/25000=4.46 168000/25000=6.72 120000/25000=4.80 Common stock (dividend per share) 0 0 52290/83000=0.63 145250/83000=1.75

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