posted by Sarah on .
Olympic Theatre Inc. owns and operates movie theaters throughout Texas and California.Olympic Theatre has?
declared the following annual dividends over a six-year period: 2003, $21,000; 2004, $50,000; 2005, $15,000; 2006, $80,000; 2007, $90,000; and 2008, $140,000. During the entire period, the outstanding stock of the company was composed of 10,000 shares of 4% preferred stock, $75 par, and 100,000 shares of common stock, $10 par.
Assuming that the preferred stock was sold at $80 and common stock was sold at par at the beginning of the six-year period, calculate the average annual percentage return on initial shareholders’s investment, based on the average annual dividend per share (a) for preferred stock and (b) for common stock.
Would it be: a.3.42% b. 3.87%