Question

Suppose Global Cable has declared a dividend of $2,500,000. The company has 240,000 shares of preferred stock that pay $2.10 per share and 2,600,000 shares of common stock. After finding the amount of dividends due the preferred shareholders, calculate the dividend per share of common stock.

Answer 1

$0.7676

Explanation:

Dividend declared = $2,500,000.

Total shares of preferred stock = 240,000

Each share costs $2.10

So, Total cost of shares of preferred stock = 240,000×2.10

Dividend due to the preferred shareholders = $504,000.

Now,

Total shares of common stock = 2,600,00

Cost of shares of common stocks = Total dividend - Total cost of shares of

preferred stock

= $2,500,000-504,000

= $1,996,000

Dividend per share of common stock =$
`(1,996,000)/(2,600,000)`

= $0.7676