50.1K

Verified Solution

Link Copied!

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, $32,000; 20Y2, $64,000; 2013, $144,000; 20Y4, $184,000; 20Y5, $232,000; and 2016, $280,000. During the entire period ended December 31 of each year, the outstanding stock of the company was composed of 40,000 shares of cumulative, preferred 2% stock, $100 par, and 100,000 shares of common stock, $20 par. Required: 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 2011. Summarize the data in tabular form. If required, round your answers to two decimal places. If the amount is zero, please enter "0". Preferred Dividends Common Dividends Total Dividends Year Total Per Share Total Per Share 20Y1 $ 32,000 $ 32,000 $ 0 0 0.80 1.60 20Y2 64,000 64,000 0 0 20Y3 144,000 133,000 3.32 10,000 0.10 0.84 2014 184,000 100,000 2.5 84,000 132,000 2015 232,000 100,000 1.32 2016 280,000 100,000 2.5 180,000 1.80 $ 13.22 4.06 20Y2 64,000 64,000 1.60 3.32 0 0.10 2013 144,000 133,000 10,000 2014 184,000 100,000 2.5 84,000 0.84 2015 232,000 100,000 2.5 132,000 1.32 2016 280,000 100,000 2.5 180,000 1.80 $ 13.22 4.06 2. Determine the average annual dividend per share for each class of stock for the six-year period. If required, round your answers to two decimal places. Average annual dividend for preferred $ $ 2.20 per share 0.68 per share Average annual dividend for common 3. Assuming a market price per share of $164 for the preferred stock and $26 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. Round your answers to two decimal places. Preferred stock 1.34 % Common stock 2.62 %

Answer & Explanation Solved by verified expert

See Answer