Canyon Corporation was founded in early 2007. The company lost money during its

Question

Canyon Corporation was founded in early 2007. The company lost
money during its first year of operations, and therefore did not pay
dividends in 2007.
In 2008, however, the company showed a profit of $1,500,000.
Although the company's board of directors wanted to keep most of
that money to fund various new products and expansion projects, it
did authorize the payment of $200,000 in dividends on February 1,
2009.
As of February 1, 2009, the company had the following stock
outstanding:
50,000 shares of common stock
500 shares of $200 par value, 5% cumulative preferred stock
What was the company's dividend per share of common stock?
Dividend per share of common stock = $

Explanation / Answer

Because Preferred stock is cumulative, Dividend to Preferred stock=Regular Pref.Div(2009)+Pref. Div in Arreas(2007,2008). =500*$200*5% + 500*$200*5%*2years= $5000 + $10000=$15000 Div to common=$200000-$15000=$185000 Dividend per sh of com stock=$185000/50000sh=$1.70/sh

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