Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georg

Question

Pecan Theatre Inc. owns and operates movie theaters throughout Florida and Georgia. Pecan Theatre has declared the following annual dividends over a six-year period: Year 1, $24,000; Year 2, $48,000; Year 3, $108,000; Year 4, $132,000; Year 5, $168,000; and Year 6, $210,000. During the entire period ended December 31 of each year, the outstanding stock of the company was composed of 30,000 shares of cumulative preferred 2% stock, $100 par, and 100,000 shares of common stock, $20 par.

Required:

1. Determine 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 at the beginning of Year 1. Summarize the data in tabular form. If required, round your answers to two decimal places. If the amount is zero, please enter "0".

2. Determine 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 $150 for the preferred stock and $26 for the common stock, determine 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 Year 1 $   24,000 $ $ $ $ Year 2 48,000 Year 3 108,000 Year 4 132,000 Year 5 168,000 Year 6 210,000 $ $

Explanation / Answer

Preferred Dividends Common Dividends Year Total Dividends Total Per Share Total Per Share Year 1 $           24,000 $24,000.00 $          0.80 $              -   $              -   Year 2 $           48,000 $48,000.00 $          1.60 $              -   $              -   Year 3 $          108,000 $60,000.00 $          2.00 $        48,000 $           0.48 Year 4 $          132,000 $60,000.00 $          2.00 $        72,000 $           0.72 Year 5 $          168,000 $60,000.00 $          2.00 $      108,000 $           1.08 Year 6 $          210,000 $60,000.00 $          2.00 $      150,000 $           1.50 Average Dividend $ 1.73 $ 0.63 Share Price $ 150 $ 26 average annual dividend per share 1.16% 2.42%

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