Giga Manufacturing Corporation has 3,500 shares of cumulative, 6.5%, $50 par val

Question

Giga Manufacturing Corporation has 3,500 shares of cumulative, 6.5%, $50 par value preferred stock outstanding, and 320,000 shares of common stock with a par value of $1.00 per share.

Last year the company failed to pay its regular dividend, but the board of directors would like to resume paying its regular dividend this year. The board determinds that $10,000 cash will be paid this year to preferred and common stockholders.

a) Calculate the total amount to be paid to: (1) preferred and (2) common stockholders.

b) calculate the dividend per share for: (1) preferred and (2) common stockholders.

Explanation / Answer

preferred dividend =3500 *50 *.065 = 11375

10000/ 3500 =

$ 2.857 per share

**since dividend paid =$ 10000 in year thus preferred dividend paid is restricted to 10000 and remaining dividend is carried forward as arrear to next year . (11375 + +1375 = 12750)

preferred stock common stock current year dividned 10000 ** 0 Total dividend paid 10000 0 dividendper share

10000/ 3500 =

$ 2.857 per share

0

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