Yosemite Bike Corp. manufactures mountain bikes and distributes them through retail outlets in California, Oregon, and Washington. Yosemite Bike has declared the following annual dividends over a six-year period ended December 31 of each year: 20Y1, $24,000; 20Y2, $10,000; 20Y3, $126,000; 20Y4, $100,000; 20Y5, $125,000; and 20Y6, $125,000. During the entire period, the outstanding stock of the company was composed of 25,000 shares of cumulative preferred 2% stock, $90 par, and 100,000 shares of common stock, $4 par.

Instructions

1. Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years. There were no dividends in arrears at the beginning of 20Y1. Summarize the data in tabular form, using the following column headings:

2. Determine the average annual dividend per share for each class of stock for the six-year period.

3. Assuming a market price of $100 for the preferred stock and $5 for the common stock, determine the average annual percentage return on initial shareholders’ investment, based on the average annual dividend per share 

(a) For preferred stock and 

(b) For common stock.

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Preferred Dividends Common Dividends Total Total Dividends Total Per Share Per Share Year 20Υ1 20Υ2 20Y3 $ 24,000 10,000 126,000 20Υ4 20Y5 20Y6 100,000 125,000 125,000