Dividends on Preferred and Common Stock

Black Bear Bike Corp. manufactures mountain bikes and distributes them through retail outlets in California, Oregon, and Washington. Black Bear Bike Corp. has declared the following annual dividends over a six-year period ended December 31 of each year: Year 1, $42,500; Year 2, $18,000; Year 3, $223,500; Year 4, $178,000; Year 5, $222,000; and Year 6, $222,000. During the entire period, the outstanding stock of the company was composed of 50,000 shares of cumulative preferred 2% stock, $80 par, and 100,000 shares of common stock, $4 par.

Required:

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 on January 1, Year 1. Summarize the data in tabular form. If required, round your per share answers to two decimal places. If the amount is zero, please enter "0".

Preferred Dividends

Common Dividends

Year

Total Dividends

Total

Per Share

Total

Per Share

Year 1

$42,500

$fill in the blank 1

$fill in the blank 2

$fill in the blank 3

$fill in the blank 4

Year 2

18,000

fill in the blank 5

fill in the blank 6

fill in the blank 7

fill in the blank 8

Year 3

223,500

fill in the blank 9

fill in the blank 10

fill in the blank 11

fill in the blank 12

Year 4

178,000

fill in the blank 13

fill in the blank 14

fill in the blank 15

fill in the blank 16

Year 5

222,000

fill in the blank 17

fill in the blank 18

fill in the blank 19

fill in the blank 20

Year 6

222,000

fill in the blank 21

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$fill in the blank 25

$fill in the blank 26

2. Determine the average annual dividend per share for each class of stock for the six year period. Round your answers to two decimal places.

Average annual dividend for preferred stock	$fill in the blank 27 per share
Average annual dividend for common stock	$fill in the blank 28 per share

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. Round your answers to one decimal place.

Preferred stock	fill in the blank 29 %
Common stock	fill in the blank 30 %