Question

During the entire period, the outstanding stock of the company was composed of $10,000 shares of 4% preferred stock, $75 par, and 100,000 shares of common stock, $10 par.

1. calculate the total dividends and the per-share dividends declared on each class of stock for each of the six years. Summarize the data in tabular form, using the following column headings:

Year          total          preferred dividends           common dividends
                      Dividends     total       per share           total          per share

2003          $21,000
2004           50,000
2005           15,000
2006           80,000
2007           90,000
2008                  140,000

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

3. assuming that the preferred stock was sold at $80 and common stock was sold par at the beginning of the six-year period, 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.