Hopen Consulting has 310,000 shares of $100 par value, 8% cumulative preferred stock and 2,650,000 shares of common stock. Although no dividend was declared last year, a $6,500,000 dividend has been declared this year. After finding the amount of dividends due the preferred shareholders, calculate the dividend per share of common stock.

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The preferred stock dividends are calculated first. With 310,000 shares at $100 par value and an 8% dividend rate, the annual dividend per preferred share is $8 ($100 * 8%). The total preferred dividend is $2,480,000 (310,000 shares * $8). Since no dividend was declared last year, and the preferred stock is cumulative, an additional $2,480,000 is due for the previous year, totaling $4,960,000 for both years. After paying the preferred dividends, $1,540,000 remains for common shareholders ($6,500,000 total dividend - $4,960,000 preferred dividends). Dividing this by the 2,650,000 common shares gives a dividend per common share of approximately $0.58 ($1,540,000 / 2,650,000).

Hopen Consulting Has 310,000 Shares of $100 Par Value, 8