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 ending December 31 of each year: Year 1, $32,000; Year 2, $40,000; Year 3, $64,000; Year 4, $192,000; Year 5, $232,000; and Year 6, $296,000. During the entire period, the outstanding stock of the company was composed of 20,000 shares of 4% preferred stock, $100 par, and 100,000 shares of common stock, $25 par.

1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. If required, round your answers to the nearest cent. If the amount is zero, please enter "0".

Preferred Dividends (20,000 shares) Common Dividends (100,000 shares) Year Total Dividends Total Per Share Total Per Share Year 1 $   32,000 $ $ $ $ Year 2 40,000 Year 3 64,000 Year 4 192,000 Year 5 232,000 Year 6 296,000

Explanation / Answer

AS PREFRERED SHARE HAS A FIXED DIVIDEND THE SHARE HOLDER WILL GET MAXIMUM THAT COUPON DIVIDEND.

HERE THE PREFERED SHARE HAS 4% DIVIDEND I;E $200000 * 4% = $80000 MAXIMUM.

THE REST INCOME WILL BE GIVEN AS DIVIDEND TO THE COMMON SHARE HOLDERS.

YEAR TOTAL DIVIDEND PREFERED DIVIDENDS COMMON DIVIDEND TOTAL PER SHARE TOTAL PER SHARE YEAR1 $32000 $32000 $1.6 0 0 YEAR2 $40000 $40000 $2.0 0 0 YEAR3 $64000 $64000 $3.2 0 0 YEAR4 $192000 $80000 $4 $112000 $1.12 YEAR5 $232000 $80000 $4 $152000 $1.52 YEAR6 $296000 $80000 $4 $216000 $2.16

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