The board of directors of Midwest Foods has declared a dividend of $3,500,000. The company has 300,000 shares of preferred stock that pay $2.85 per share and 2,500,000 shares of common stock. After finding the amount of dividends due the preferred shareholders, calculate the dividend per share of common stock.

$1.06 per share

Step-by-step explanation:

Calculation for dividend per share of common stock for board of directors of Midwest Foods

First step is to find the dividends due to the preferred shareholders

Dividends due to the preferred shareholders will be calculated as:

Using this formula

Total Dividend =Dividend- (Preferred stock *Per share of preferred stock )

Where,

Dividend=$3,500,000

Preferred stock =$300,000

Per share of preferred stock =$2.85

Let plug in the formula

Total Dividend =$3,500,000-($300,000*$2.85)

Total Dividend =$3,500,000-$855,000

Total Dividend =$2,645,000

The second step is to find Dividend per share of common stock

Using this formula

Dividend per share of common stock=Total dividend/Shares of common stock

Where,

Total dividend=$2,645,000

Shares of common stock=$2,500,000

Let plug in the formula

Dividend per share of common stock=$2,645,000/$2,500,000

Dividend per share of common stock=$1.06 per share

Therefore the dividend per share of common stock for board of directors of Midwest Foods will be $1.06 per share

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step-by-step explanation:

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