Rhinehart Corporation had both common stock and preferred stock outstanding from 2012 through 2014. Information about each stock for the three years follows.
|
type
|
Par Value
|
Shares Outstanding
|
Other
|
|
Preferred
|
$100
|
40,000
|
7% cumulative
|
|
Common
|
20
|
600,000
|
|
The company paid $140,000, $800,000, and $1,100,000 in dividends for 2012 through 2014, respectively. The market price per common share was $15 and $17 per share at the end of years 2013 and 2014, respectively.
Required:
1. Determine the dividends per share and total dividends paid to the common and preferred stockholders each year. (Round to the nearest cent.)
2. Assuming that the preferred stock was noncumulative, repeat the computations performed in requirement 1. (Round to the nearest cent.)
3. Business application- Calculate the 2013 and 2014 dividend yield for common stock using dividends per share computed in requirement 2. (Round to the nearest tenth of a percent.)
4. Accounting Connection- How are cumulative preferred stock and noncumulative preferred stock similar to long-term bonds? How do they differ from long- term bonds?