Question

Lightfoot Inc., a software development firm, has stock outstanding as follows: 25,000 shares of cumulative preferred 2% stock, $20 par, and 31,000 shares of $125 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $3,750; second year, $6,250; third year, $42,940; fourth year, $88,120. 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".

Preferred stock (dividend per share)

1st year:

2nd year:

3rd year:

4th year:

Common stock (dividend per share)

1st year:

2nd year:

3rd year:

4th year:

Answer 1

Calculate dividend per share

Preferred dividend = 25000*20*2% = 10000

Dividend distribution

	Total dividend	Preferred dividend	Common Dividend
1st year	3750	0.15	0
2nd year	6250	0.25	0
3rd year	42940	20000/25000 = 0.80	22940/31000 = 0.74
4th year	88120	10000/25000 = 0.40	78120/31000 = 2.52