Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: Year 1, $80,000; Year 2, $90,000; Year 3, $150,000; Year 4, $150,000; Year 5, $160,000; and Year 6, $180,000. During the entire period ended December 31 of each year, the outstanding stock of the company was composed of 250,000 shares of cumulative, preferred 2% stock, $20 par, and 500,000 shares of common stock, $15 par. Instructions 1. Determine the total dividends and the per-S
Dividends on preferred and common stock
Pecan Theatre Inc. owns and operates movie theaters throughout
Florida and Georgia. Pecan Theatre has declared the following annual
dividends over a six-year period: Year 1, $80,000; Year 2, $90,000; Year 3,
$150,000; Year 4, $150,000; Year 5, $160,000; and Year 6, $180,000. During
the entire period ended December 31 of each year, the outstanding stock
of the company was composed of 250,000 shares of cumulative,
preferred 2% stock, $20 par, and 500,000 shares of common stock, $15
par.
Instructions
1. Determine the total dividends and the per-Shan: dividends
declared one each class of stock for each of the six years. There
were no dividends in arrears at the beginning of Year 1. Summarize
the data in tabular form, using the following column heading: (attached)
2. Determine the average annual dividend per share for each class
of stock for the six- year period.
3. Assuming a market price per share of $25.00 for the preferred
stock and $17.50 for the common stock, determine the average
annual percentage return on initial shareholders' investment,
based on the average annual dividend per share (a) for preferred
stock and (b) for common stock.
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