Determine the dividends per share

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Question - Avaya Corporation had the following stock outstanding from 2011 through 2014:

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 2011, 2012, 2013, and 2014, respectively. The market price per common share was $7.25 and $8.00 per share at the end of years 2013 and 2014, respectively.

Required -

1. Determine the dividends per share and the total dividends paid to common stock-holders and preferred stockholders in 2011, 2012, 2013, and 2014.

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

3. Calculate the 2013 and 2014 dividend yield for common stock, using the dividends per share computed in requirement 2. (Round to the nearest tenth of a percent.)

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

Reference no: EM132094431

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