Total Dividends $ 80,000 Preferred Dividends Total Common Dividends Per Share Per Share Total Year 20Y1 90,000 150,000 20Y2 20Y3 20Y4 150,000 20YS 160,000 20Y6 180,000
Common dividends in 20Y3: $20,000
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: 20Y1,$80,000; 20Y2, $90,000; 20Y3, $150,000; 20Y4, $150,000; 20Y5, $160,000; and 20Y6, $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-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of 20Y1. Summarize the data in tabular form, using the following column headings:
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 live 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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