Question: Yukon bike corp. manufactures mountain bikes and distributes them through retail outlets in Canada. Montana, Idaho, Oregon, and Washington. Yukon Bike Corp. has declared the following annual dividends over a six-year period ending December 31 of each year: Year 1, $28,000; Year 2, $44,000; Year 3, $48,000; Year 4, $60,000; Year 5, $76,000; and Year 6, $140,000. During the entire period, the outstanding stock of the company was composed of 40,000 shares of 2% preferred stock, $65 par and 50,000 shares of common stock, $1 par.
2. Calculate the average annual dividened per share for each class of stock for the six-year period. 3. Assumning that the preferred stock was sold at $57.50 and common stock was sold at $5.00 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.
| Year |
Total
dividends |
Preferred
Dividends total |
Preferred dividends
per share |
Common
dividends total
|
Common dividends
per share
|
| Year1 |
$28000 |
|
|
|
|
| Year 2 |
44000 |
|
|
|
|
| Year 3 |
48000 |
|
|
|
|
| Year 4 |
60000 |
|
|
|
|
| Year 5 |
76000 |
|
|
|
|
| Year 6 |
140000 |
|
|
|
|