Question

Lightfoot Inc., a software development firm, has stock outstanding as follows: 25,000 shares of cumulative preferred 2% stock, $25 par, and 31,000 shares of $50 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $4,750; second year, $8,000; third year, $52,340; fourth year, $106,430. 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 "O". 1st Year 2nd Year 3rd Year 4th Year Preferred stock (dividend per share) Common stock (dividend per share) A TA A

Answer 1

Solution

	1st Year	2nd Year	3rd Year	4th Year
Preferred stock	$                    0.19	$                  0.32	$                        0.99	$                      0.50
Common stock	$                         -	$                      -	$                        0.89	$                      3.03

Working

	Par Value per Preferred share	Dividend rate	Dividend per preffred share	Number of preffered shares	Preffered Dividend
Annual Prefrred Dividend:	25	2.00%	$                     0.500	25000	$           12,500.00
Year	Total Cash dividend Paid	Paid to Preferred	Paid to common	Dividends in arear at year-end
1	$            4,750.00	$         4,750.00	$ 0	$ 7,750
2	$            8,000.00	$         8,000.00	$ 0	$ 12,250
3	$         52,340.00	$       24,750.00	$ 27,590
4	$       106,430.00	$       12,500.00	$ 93,930
Total	$       171,520.00	$       50,000.00	$           121,520.00	$ 20,000