Da Show Inc. owns and operates movie theaters throughout Texas and California. Da Show has declared the following annual dividends over a six-year period: 2003, $18,000; 2004, $54,000; 2005, $70,000; 2006, $75,000; 2007, $80,000; and 2008, $90,000. During the entire period, the out- standing stock of the company was composed of 20,000 shares of cumulative, 2% preferred stock, $100 par, and 25,000 shares of common stock, $10 par.
Instructions:
1. Calculate 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, 2003. Summarize the data in tabular form, using the following column headings:
Total Preferred Dividends Common Dividends
|
Year
|
Dividends
|
Total
|
Per Share
|
Total
|
Per Share
|
|
2003
|
$18,000
|
|
|
|
|
|
2004
|
54,000
|
|
|
|
|
|
2005
|
70,000
|
|
|
|
|
|
2006
|
75,000
|
|
|
|
|
|
2007
|
80,000
|
|
|
|
|
|
2008
|
90,000
|
|
|
|
|
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 par and common stock was sold at $39.20 at the beginning of the six-year period, calculate the average annual percentage return on ini- tial shareholders' investment, based on the average annual dividend per share (a) for pre- ferred stock and (b) for common stock.