Olympic Theatre Inc. owns and operates movie theaters throughout Texas and California.
Olympic Theatre has declared the following annual dividends over a six-year period: 2003, $21,000; 2004, $50,000; 2005, $15,000; 2006, $80,000; 2007, $90,000; and 2008, $140,000. During the entire period, the outstanding stock of the company was composed of 10,000 shares of 4% preferred stock, $75 par, and 100,000 shares of common stock, $10 par.

Instructions
1. Calculate the total dividends and the per-share dividends declared on each class of stock for each of the six years. Summarize the data in tabular form, using the following column headings:

2. Calculate the average annual dividend per share for each class of stock for the six-year period.
3. Assuming that the preferred stock was sold at $80 and common stock was sold at par at the beginning of the six-year period, calculate the average annual percentage return on initial shareholders' investment, based on the average annual dividend per share
(a) For preferred stock and
(b) For commonstock.

Transcribed Image Text:

Preferred Dividends n Dividends Commo Total Dividends Total Per Share Total Per Share Year 2003 $ 21,000 2004 2005 2006 90,000 2007 140,000 2008 50,000 15,000 80,000