One company has $200,000 to distribute in dividends. There are 17,000 shares of preferred stock that earn dividends at $0.60 per share and 80,000 shares of common stock. How much per share does a common stockholder receive in dividends to the nearest cent?

17,000 * 0.6 = 10,200


200,000 - 10,200 = 189,800

189,800 / 80,000 = 2.37

Thank you.

To calculate the dividend per share for common stockholders, we need to determine how much of the $200,000 dividend distribution will go to the preferred stockholders.

First, we calculate the total amount of dividends that the preferred stockholders earn. We multiply the number of shares of preferred stock (17,000) by the dividend rate per share ($0.60):

Dividend for preferred stock = 17,000 shares * $0.60/share
Dividend for preferred stock = $10,200

Next, we subtract the amount of dividends paid to the preferred stockholders from the total dividend amount to find the remaining amount available for the common stockholders:

Dividend for common stockholders = Total dividend amount - Dividend for preferred stock
Dividend for common stockholders = $200,000 - $10,200
Dividend for common stockholders = $189,800

Now, we divide the remaining dividend amount by the number of common shares (80,000) to find the dividend per share for common stockholders:

Dividend per share for common stockholders = Dividend for common stockholders / Number of common shares
Dividend per share for common stockholders = $189,800 / 80,000
Dividend per share for common stockholders ≈ $2.37 (rounded to the nearest cent)

Therefore, each common stockholder will receive approximately $2.37 in dividends per share.