Reference no: EM131792332

Problem - A corporation has declared the following annual dividends over a six year period ending Dec. 31 of each year: 2005 - $5,000; 2006 - $18,000; 2007 - $45,000; 2008 - $45,000; 2009 - $60,000; 2010 - $67,000. During entire period, the outstanding stock of the company was composed of 10,000 shares of 2% cumulative preferred stock, $100 par and 25,000 shares of common stock, $ par.

Instructions:

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 on January 1, 2005. Summarize the data in tabular form, using the following column headings

1. Preferred Dividends  Common Dividends       

Total     

Year       Dividends            Total      Per Share            Total      Per Share           

2005       $5,000

2006       18,000

2007       45,000

2008       45,000

2009       60,000

2010       67,000

2. Determine the average annual dividend per share for each class of stock for the six year period

3. Assuming a market price of $125 for the preferred stock and $8 for the common stock, calculate the average annual percentage return on initial shareholders' investment, based on the average annual dividend per share (a) for preferred stock and (b) for common stock.

Attachment:- Assignment.rar