During 2018, Blue Ridge Corporation reported after-tax net income of $4,150,000.

Question

During 2018, Blue Ridge Corporation reported after-tax net income of $4,150,000. During the year, the number of shares of stock outstanding remained constant at 15,000 of $100 par, 9 percent preferred stock and 400,000 shares of common stock. The company’s total stockholders’ equity is $20,000,000 at December 31, 2018. Blue Ridge Corporation’s common stock was selling at $80 per share at the end of its fiscal year. All dividends for the year have been paid, including $4.80 per share to common stockholders.

Required

Compute the earnings per share. (Round your answer to 2 decimal places.)

Compute the book value per share of common stock. (Round your answer to 2 decimal places.)

Compute the price-earnings ratio. (Round intermediate calculations and final answer to 2 decimal places.)

Compute the dividend yield. (Round your answer to 2 decimal places. (i.e., .2345 should be entered as 23.45).)

Explanation / Answer

1. EPS = EAT - pref dividend / no. of common equity share
EAT = earning after TAX

2.BVPS = book value per share = common shares value / no. of common shares

3. price earning ratio = market price of share / earning per share
= 80 / 10.035
=7.97

4. dividend yield = dividend per share / market price per share
=4.80 / 80
=.06 or 6%

EAT 4150000 LESS PREF DIVIDEND 135000 (1500000*0.09) EARNING FOR COMMON SHARE 4015000 NO .of common share 400000 EPS 10.0375

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