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 2008 if a $.75 per share dividend on the common stock is paid at the end of 2011.

What is the total amount of dividends received?

a + b * c = d

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Originally Posted by paraclete

a + b * c = d

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Paraclete,

I tried using that formula and the system is telling me the answer is incorrect. Below is my work. Do I need to do something else ti calculate the final answer since the time frame in the question is from 2008-2011 for dividends owed?

400 preferred stock+6000 common stock*.75= $4800

I even tried multiplying $4800*4 years=$19200 and that was incorrect as well.

Well the a plain reading of the text supports what you have done, is part of the question missing? If you know the answer then you should be able to deduce the methodology.

I cannot tell if it is implied that a dividend was paid in each of the years or not. Nor do I know anything about the preferred stock so make the simple assumption that the question speaks about a dividend paid to all shareholders in a particular year. Is this one part of a larger question?

Quote:

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Originally Posted by paraclete

well the a plain reading of the text supports what you have done, is part of the question missing? If you know the answer then you should be able to deduce the methodology.

I cannot tell if it is implied that a dividend was paid in each of the years or not. Nor do I know anything about the preferred stock so make the simple assumption that the question speaks about a dividend paid to all shareholders in a particular year. Is this one part of a larger question?

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Yes, sorry :(

The company did not pay dividends in 2009 or 2010, even though 50,000 shares of its 6.5%, $50 par value cumulative preferred stock were outstanding during those years. The company still has 800,000 shares of $2.50 par value common stock outstanding.

Calculate the amount that would be received by an investor who has owned 400 shares of preferred and 6,000 shares of common stock since 2008 if a $0.75 per share dividend on the common stock is paid at the end of 2011.

So the preferred stock dividend is $3.25 per share cumulative but not participating. As it is preferred stock it is reasonable to assume that all preferred stock dividends are paid before the common stock dividend. The preferred stock attracts dividends in 2009, 2010 and 2011

Does adding this into the mix help you to arrive at the correct answer for both the individual shareholder and the total dividends