The board of directors of Midwest Foods has declared a dividend of $3,500,000. The company has 300,000 shares of preferred stock that pay $2.85 per share and 2,500,000 shares of common stock. After finding the amount of dividends due the preferred shareholders, calculate the dividend per share of common stock.

Question

Quizplus · Accepted Answer

The preferred shareholders are paid first: 300,000 shares * $2.85/share = $855,000. The remaining dividend for common shareholders is $3,500,000 - $855,000 = $2,645,000. Dividing this by the 2,500,000 common shares gives a dividend per share of $1.058, which rounds to $1.06.

The Board of Directors of Midwest Foods Has Declared a Dividend