Dividends on Preferred and Common Stock

Yosemite Bike Corp. manufactures mountain bikes and distributesthem through retail outlets in California, Oregon, and Washington.Yosemite Bike has declared the following annual dividends over asix-year period ended December 31 of each year: 20Y1, $24,750;20Y2, $10,250; 20Y3, $105,000; 20Y4, $95,000; 20Y5, $115,000; and20Y6, $130,000. During the entire period, the outstanding stock ofthe company was composed of 25,000 shares of cumulative preferred2% stock, $80 par, and 100,000 shares of common stock, $4 par.

Required:

1. Determine the total dividends and theper-share dividends declared on each class of stock for each of thesix years. There were no dividends in arrears at the beginning of20Y1. Summarize the data in tabular form. If required, round youranswers to two decimal places. If the amount is zero, please enter"0".

					Preferred Dividends									Common Dividends
Year	Total Dividends				Total				Per Share					Total				Per Share
20Y1	$24,750				$				$					$				$
20Y2	10,250
20Y3	105,000
20Y4	95,000
20Y5	115,000
20Y6	130,000
									$									$

2. Determine the average annual dividend pershare for each class of stock for the six-year period. Round youranswers to two decimal places.

Average annual dividend for preferred stock	$ per share
Average annual dividend for common stock	$ per share

3. Assuming a market price of $100 for thepreferred stock and $5 for the common stock, determine the averageannual percentage return on initial shareholders’ investment, basedon the average annual dividend per share (A) for preferred stockand (B) for common stock. Round your answers to two decimalplaces.

Preferred stock	%
Common stock	%