Hometown Grocery, Inc. has 41,000 shares of common stock outstanding and 5,000 shares of preferred stock outstanding. The common stock is $6.00 par value; the preferred stock is 4% noncumulative with a $100.00 par value. On October 15, 2018, the company declares a total dividend payment of $55,000. What is the amount of dividend that will be paid for each share of common stock? (Round your answer to the nearest cent.)

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DeniceSandidge DeniceSandidge · Answer 1 · 2020-02-06T11:22:40+01:00

Answer:

Dividend Per Each Share = $0.85 per share

Explanation:

given data

common stock outstanding = 41,000 shares

preferred stock outstanding = 5,000 shares

common stock = $6.00 par value

preferred stock 4% noncumulative = $100.00 par value

total dividend payment = $55,000

solution

we get here Total Preferential Divided that is

Total Preferential Divided = Shares × Face Value × 4% ........1

Total Preferential Divided = 100 × 5000 × 4%

Total Preferential Divided = 20000

so as that Total Equity Dividend is

Total Equity Dividend = Total Dividend - Total Equity Dividend .............2

Total Equity Dividend = $55,000 - 20000

Total Equity Dividend = 35000

so Dividend Per Each Share will be

Dividend Per Each Share = [tex]\frac{Equity\ Dividend}{Total\ Equity\ Shares}[/tex] ..............3

Dividend Per Each Share = [tex]\frac{35000}{41000}[/tex]

Dividend Per Each Share = $0.85 per share