Compute the amount of dividends to preferred and common stockholders for the years 2018 and 2019.

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Chapter 10, Problem 35BE

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Compute the amount of dividends to preferred and common stockholders for the years 2018 and 2019.

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Financial Learning Systems has 1.7 million shares of common stock outstanding and 97,218 shares of preferred stock. (The preferred pays annual cash dividends of $5.02 a share, and the common pays annual cash dividends of 26 cents a share.) Last year, the company generated net profit (after taxes) of $7,076,423. The company's balance sheet shows total assets of $80 million, total liabilities of $36 million, and $5 million in preferred stock. The firm's common stock is currently trading in the market at $40.57 a share. a. Given the preceding information, find the EPS, P/E ratio, and book value per share. b. What will happen to the price of the stock if EPS rises to $5.85 and the P/E ratio stays where it is? What will happen if EPS drops to $2.32 and the P/E doesn't change? c. What will happen to the price of the stock if EPS rises to $5.85 and the P/E jumps to 14.8 times earnings? d. What will happen if both EPS and the P/E ratio drop—to $2.32 and 5.7 times…