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Preferred Stock: Calculate Dividend Amounts

Qamar, Inc., did not pay dividends in 2007 or 2008, even though 50,000 shares of its 6.5%, $50 par value cumulative preferred stock were outstanding during those years. The company has 800,000 shares of $2.50 par value common stock outstanding.


a. Calculate the annual dividend per share obligation on the preferred stock.

b. Calculate the amount that would be received by an investor who has owned 400 shares of preferred stock and 6,000 shares of common stock since 2006 if a $.75 per share dividend on the common stock is paid at the end of 2009.

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Solution a

Annual Dividend on Preferred stock per share is 50*6.5% = $3.25

Solution b

Common ...

Solution Summary

The solution computes dividend amounts for both preferred stock and common stock.