Dividends on Preferred and Common Stock
Love Theatre Inc. owns and operates movie theaters throughoutNew Mexico and Utah. Love Theatre has declared the following annualdividends over a six-year period ending December 31 of each year:Year 1, $30,000; Year 2, $37,500; Year 3, $60,000; Year 4,$180,000; Year 5, $225,000; and Year 6, $270,000. During the entireperiod, the outstanding stock of the company was composed of25,000 shares of 3% preferred stock, $100 par, and100,000 shares of common stock, $25 par.
To calculate dividends, you need to understand thefollowing:
1) Preferred dividends are always paid before Common dividends.Whatever is left over after paying preferred stockholders goes tocommon stockholders.
2) Preferred dividends per share are calculated by multiplyingthe par value of the stock (per share) by the percentage shown onthe stock. For example, 5% Preferred, $100 par value would be paidannual dividends of $5 per share. (Sometimes preferred stock isshown with a dollar amount instead of a percentage. In this case,the dollar amount is the amount of annual dividend per share. Forexample, $3 Preferred, $100 par value would be paid annualdividends of $3 per share.)
3) The par value of common stock never enters into thecalculation of common dividends. Common stockholders simply receivewhatever dividends are left over after the preferred dividends arepaid (if there is anything left over). Common dividends aredistributed evenly to each share. For example, if there is $10,000left over after paying preferred dividends, and there are 100,000shares of common stock outstanding, each share of common stockwould receive $.10 in dividends.
4) Dividends are never paid on shares of treasury stock (stockthe company has purchased back from common stockholders).
Instructions:
1. Determine the total dividends and theper-share dividends declared on each class of stock for each of thesix years. If required, round your answers to the nearest cent. Ifthe amount is zero, please enter "0".
PreferredDividends (25,000 shares) CommonDividends (100,000 shares) Year TotalDividends Total Per Share Total Per Share Year 1 $ 30,000 $ $ $ $ Year 2 37,500 Year 3 60,000 Year 4 180,000 Year 5 225,000 Year 6 270,000
Dividends on Preferred and Common Stock
Love Theatre Inc. owns and operates movie theaters throughoutNew Mexico and Utah. Love Theatre has declared the following annualdividends over a six-year period ending December 31 of each year:Year 1, $30,000; Year 2, $37,500; Year 3, $60,000; Year 4,$180,000; Year 5, $225,000; and Year 6, $270,000. During the entireperiod, the outstanding stock of the company was composed of25,000 shares of 3% preferred stock, $100 par, and100,000 shares of common stock, $25 par.
To calculate dividends, you need to understand thefollowing:
1) Preferred dividends are always paid before Common dividends.Whatever is left over after paying preferred stockholders goes tocommon stockholders.
2) Preferred dividends per share are calculated by multiplyingthe par value of the stock (per share) by the percentage shown onthe stock. For example, 5% Preferred, $100 par value would be paidannual dividends of $5 per share. (Sometimes preferred stock isshown with a dollar amount instead of a percentage. In this case,the dollar amount is the amount of annual dividend per share. Forexample, $3 Preferred, $100 par value would be paid annualdividends of $3 per share.)
3) The par value of common stock never enters into thecalculation of common dividends. Common stockholders simply receivewhatever dividends are left over after the preferred dividends arepaid (if there is anything left over). Common dividends aredistributed evenly to each share. For example, if there is $10,000left over after paying preferred dividends, and there are 100,000shares of common stock outstanding, each share of common stockwould receive $.10 in dividends.
4) Dividends are never paid on shares of treasury stock (stockthe company has purchased back from common stockholders).
Instructions:
1. Determine the total dividends and theper-share dividends declared on each class of stock for each of thesix years. If required, round your answers to the nearest cent. Ifthe amount is zero, please enter "0".
| PreferredDividends (25,000 shares) | CommonDividends (100,000 shares) | ||||||||||||||||||||||
| Year | TotalDividends | Total | Per Share | Total | Per Share | ||||||||||||||||||
| Year 1 | $ 30,000 | $ | $ | $ | $ | ||||||||||||||||||
| Year 2 | 37,500 | ||||||||||||||||||||||
| Year 3 | 60,000 | ||||||||||||||||||||||
| Year 4 | 180,000 | ||||||||||||||||||||||
| Year 5 | 225,000 | ||||||||||||||||||||||
| Year 6 | 270,000 | ||||||||||||||||||||||
Related questions
Dividends on Preferred and Common Stock
Love Theatre Inc. owns and operates movie theaters throughoutNew Mexico and Utah. Love Theatre has declared the following annualdividends over a six-year period: 2009, $20,000; 2010, $60,000;2011, $100,000; 2012, $115,000; 2013, $150,000; and 2014, $175,000.During the entire period ending December 31 of each year, theoutstanding stock of the company was composed of 25,000 shares ofcumulative, 2% preferred stock, $100 par, and 100,000 shares ofcommon stock, $15 par.
Required:
1. Calculate the total dividends and theper-share dividends declared on each class of stock for each of thesix years. There were no dividends in arrears on January 1, 2009.Summarize the data in tabular form. If required, round your answersto two decimal places. If the amount is zero, please enter "0".
| Preferred Dividends | Common Dividends | ||||||||||||||||||||
| Year | Total Dividends | Total | Per Share | Total | Per Share | ||||||||||||||||
| 2009 | $ 20,000 | $ | $ | $ | $ | ||||||||||||||||
| 2010 | 60,000 | ||||||||||||||||||||
| 2011 | 100,000 | ||||||||||||||||||||
| 2012 | 115,000 | ||||||||||||||||||||
| 2013 | 150,000 | ||||||||||||||||||||
| 2014 | 175,000 | ||||||||||||||||||||
| $ | $ | ||||||||||||||||||||
2. Calculate the average annual dividend pershare for each class of stock for the six-year period. If required,round your answers to two decimal places.
| Average annual dividend for preferred | $ per share |
| Average annual dividend for common | $ per share |
3. Assuming a market price per share of $125for the preferred stock and $21 for the common stock, calculate theaverage annual percentage return on initial shareholders'investment, based on the average annual dividend per share forpreferred stock and for common stock.
Round your answers to two decimal places.
| Preferred stock | % |
| Common stock | % |
| Dividends on Preferred and Common Stock Love Theatre Inc. owns and operates movie theaters throughout New Mexico and Utah. Love Theatre has declared the following annual dividends over a six-year period: 2009, $30,000; 2010, $90,000; 2011, $135,000; 2012, $165,000; 2013, $218,000; and 2014, $270,000. During the entire period ending December 31 of each year, the outstanding stock of the company was composed of 25,000 shares of cumulative, 3% preferred stock, $100 par, and 100,000 shares of common stock, $10 par. Required: 1. Calculate the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears on January 1, 2009. Summarize the data in tabular form. If required, round your answers to two decimal places. If the amount is zero, please enter "0".
2. Calculate the average annual dividend per share for each class of stock for the six-year period. If required, round your answers to two decimal places.
3. Assuming a market price per share of $172 for the preferred stock and $14 for the common stock, calculate the average annual percentage return on initial shareholders' investment, based on the average annual dividend per share for preferred stock and for common stock. Round your answers to two decimal places.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Love Theatre Inc. owns and operates movie theaters throughoutNew Mexico and Utah. Love Theatre has declared the following annualdividends over a six-year period: 2009, $20,000; 2010, $60,000;2011, $95,000; 2012, $115,000; 2013, $140,000; and 2014, $180,000.During the entire period ending December 31 of each year, theoutstanding stock of the company was composed of 25,000 shares ofcumulative, 2% preferred stock, $100 par, and 100,000 shares ofcommon stock, $10 par. Required: 1. Calculate the total dividends and theper-share dividends declared on each class of stock for each of thesix years. There were no dividends in arrears on January 1, 2009.Summarize the data in tabular form. If required, round your answersto two decimal places. If the amount is zero, please enter "0".
2. Calculate the average annual dividend pershare for each class of stock for the six-year period. If required,round your answers to two decimal places.
3. Assuming a market price per share of $93 forthe preferred stock and $14 for the common stock, calculate theaverage annual percentage return on initial shareholders'investment, based on the average annual dividend per share forpreferred stock and for common stock. Round your answers to two decimal places.
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
