To calculate the dividends per share on each class of stock for each of the four years, we need to determine how much dividend is paid to each class of stock in each year.
For the preferred stock:
In the first year, $19,200 is distributed as dividends. Since the preferred stock is non-accumulating and non-cumulative, the preferred shareholders will receive a fixed dividend regardless of the earnings of the company. The preferred stockholders are entitled to a 2% dividend on the par value of $75.
Dividends per share for preferred stock in the first year:
= 2% of $75
= 0.02 x $75
= $1.50
In the second year, $30,000 is distributed as dividends. Again, the preferred stockholders will receive a fixed dividend of 2% of the par value of $75.
Dividends per share for preferred stock in the second year:
= 2% of $75
= 0.02 x $75
= $1.50
In the third year, $75,000 is distributed as dividends. The preferred stockholders will still receive the same fixed dividend of 2% of the par value of $75.
Dividends per share for preferred stock in the third year:
= 2% of $75
= 0.02 x $75
= $1.50
In the fourth year, $120,000 is distributed as dividends. As before, the preferred stockholders will receive the fixed dividend of 2% of the par value of $75.
Dividends per share for preferred stock in the fourth year:
= 2% of $75
= 0.02 x $75
= $1.50
Therefore, the dividends per share for the preferred stock in each of the four years are $1.50.
Now, let's calculate the dividends per share for the common stock.
In the first year, $19,200 is distributed as dividends to the common shareholders. The common shareholders receive dividends after the preferred shareholders have received their fixed dividend.
Number of shares of common stock = 100,000
Dividends per share for common stock in the first year:
= $19,200 / 100,000 shares
= $0.192
In the second year, $30,000 is distributed as dividends to the common shareholders.
Dividends per share for common stock in the second year:
= $30,000 / 100,000 shares
= $0.30
In the third year, $75,000 is distributed as dividends to the common shareholders.
Dividends per share for common stock in the third year:
= $75,000 / 100,000 shares
= $0.75
In the fourth year, $120,000 is distributed as dividends to the common shareholders.
Dividends per share for common stock in the fourth year:
= $120,000 / 100,000 shares
= $1.20
Therefore, the dividends per share for the common stock in each of the four years are $0.192, $0.30, $0.75, and $1.20.