The Rago Corporation had the following stock outstanding from 2009 through 2012:

Preferred stock: $100 par value, 8 percent cumulative, 5,000 shares authorized, issued, and outstanding

Common stock: $10 par value, 100,000 shares authorized, issued, and outstanding

The company paid $30,000, $30,000, $ 94,000, and $130,000 in dividends during 2009, 2010, 2011, and 2012, respectively. The market price per common share was $7.25 and $8.00 per share at the end of years 2011 and 2012, respectively.

Required

1. Determine the dividends per share and the total dividends paid to common stockholders and preferred stockholders in 2009, and 2010, 2011, and 2012.

2. Perform the same computations, with the assumption that the preferred stock was noncumulative.

3. Calculate the 2011 and 2012 dividends yield for common stock, using the dividends per share computed in requirement 1.

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