Fairmount Inc., a developer of radiology equipment, has stock outstanding as fol

Question

Fairmount Inc., a developer of radiology equipment, has stock outstanding as follows: 10,000 shares of cumulative 4%, preferred stock of $150 par, and 33,000 shares of $25 par common. During its first four years of operations, the following amounts were distributed as dividends: first year, $40,200; second year, $55,800; third year, $100,170; fourth year, $104,880.

Calculate the dividends per share on each class of stock for each of the four years. Round all answers to nearest whole cent. If no dividends are paid in a given year, enter "0".

Explanation / Answer

10,000 *$150/sh =$ 1,500,000 pref stock $1,500,000*.04 = $60,000 div. on pref. stock 1year $40,200 - $60,000 = -$19,800 pref div in arreas No div. to common =0 2 year 55,800 - 60,000 = -4200 pref div in arreas for 2year 19,800 + 4200 =24000 prefer div in arreas for two years. No div. to common =0 3 year 100,170 - 60,000(reg. pref div.) - 24000(pref. div div in arreas) = 16,140 div to common 60,000 + 24000 = 84000 pref div 16,140 com. div. 4 year 104,880 -60000(pref. div) = 44880 com div.

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