Problem - A corporation has declared the following annual dividends over a six year period ending Dec. 31 of each year: 2005 - $5,000; 2006 - $18,000; 2007 - $45,000; 2008 - $45,000; 2009 - $60,000; 2010 - $67,000. During entire period, the outstanding stock of the company was composed of 10,000 shares of 2% cumulative preferred stock, $100 par and 25,000 shares of common stock, $ 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 on January 1, 2005. Summarize the data in tabular form, using the following column headings
1. Preferred Dividends Common Dividends
Total
Year Dividends Total Per Share Total Per Share
2005 $5,000
2006 18,000
2007 45,000
2008 45,000
2009 60,000
2010 67,000
2. Determine the average annual dividend per share for each class of stock for the six year period
3. Assuming a market price of $125 for the preferred stock and $8 for the common stock, calculate 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.
Attachment:- Assignment.rar