The Vegas Corporation had both common stock and preferred stock outstanding from 2009 through 2011. Information about each stock for the three years is as follows:

The company paid $70,000, $400,000, and $550,000 in dividends for 2009 through 2011, respectively. The market price per common share was $15 and $17 per share at the end of years 2010 and 2011, respectively.

Required

1. Determine the dividends per share and total dividends paid to the common and preferred stockholders each year.

2. Assuming that the preferred stock was noncumulative, repeat the computations performed in requirement 1.

3. Calculate the 2010 and 2011 dividends yield for common stock using dividends per share computed in requirement 2.

4. How are cumulative preferred stock and noncumulative preferred stock similar to long-term bonds? How do they differ from long-term bonds?

Transcribed Image Text:

Shares Outstanding 20,000 Par Value Type Preferred Common Other 7% cumulative $100 300,000