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Accounting II: PLEASE HELP!!?


Preferred stock was sold at $80 par and was composed of $10,000 shares of 4%,and 100,000 shares of common stock, $10 par was sold at par at the beginning of the six year period, calculate the average return on initial shareholders' investment based on the average annual dividend per share (a) for preferred stock and (b) for common stock.
2003 - $21,000
2004 - $50,000
2005 - $15,000
2006 - $80,000
2007 - $90,000
2008 - $140,000

The average annual dividend for preferred stock is $2.73. If someone can help me answer the preferred stock, I can figure out the common stock.

Check your lesson notes and what your prof was wanting, his examples for instance.

A company is concerned with par values at the initial capitalization phase. Afterwards it has no relevance other than a benchmark for subsequent value, most practically for conversation' sake.

So the common stock was sold at its $10 par value for the initial capitalization. Care to tell what the "average annual dividend per share . . . and (b) for common stock"--you didn't say what the stock's dividend was, much less its average.

Frankly, I like the idea, as your verbage implies, paying $80 and getting $10,000 shares of preferred stock. Read the problem a little closer, there are things missing.

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