Love Theatre Inc. owns and operates movie theaters throughout New Mexico and Uta

Question

Love Theatre Inc. owns and operates movie theaters throughout New Mexico and Utah. Love Theatre has declared the following annual dividends over a six-year period: 2009, $30,000; 2010, $90,000; 2011, $150,000; 2012, $180,000; 2013, $218,000; and 2014, $270,000. During the entire period ending December 31 of each year, the outstanding stock of the company was composed of 25,000 shares of cumulative, 3% preferred stock, $100 par, and 100,000 shares of common stock, $20 par.

Required:

1. Calculate 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, 2009. Summarize the data in tabular form. If required, round your answers to two decimal places. If the amount is zero, please enter "0".

2. Calculate 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.

3. Assuming a market price per share of $196 for the preferred stock and $25 for the common stock, calculate the average annual percentage return on initial shareholders' investment, based on the average annual dividend per share for preferred stock and for common stock.

Round your answers to two decimal places.

Preferred Dividends Common Dividends
Year Total
Dividends
Total
Per Share
Total
Per Share 2009 $   30,000 $ $ $ $ 2010 90,000 2011 150,000 2012 180,000 2013 218,000 2014 270,000 $ $

Explanation / Answer

1. Total and per share dividends:

2. Average annual dividend per share:

3. Average annual percentage return:

Year Total dividends Preferred dividends Total Preferred dividends Per share Common dividends total Common dividends per share 2009 $ 30,000 $ 30,000 $ 1.2 2010 $ 90,000 $ 90,000 $ 3.6 2011 $ 150,000 $ 105,000 $ 4.2 $ 45,000 $ 0.45 2012 $ 180,000 $ 75,000 $ 3 $ 105,000 $ 1.05 2013 $ 218,000 $ 75,000 $ 3 $ 143,000 $ 1.43 2014 $ 270,000 $ 75,000 $ 3 $ 195,000 $ 1.95 Total $ 938,000 $ 450,000 $ 18 $ 488,000 $ 4.88

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