The stock of Pills Berry Company is currently selling at $75 per share. The firm

Question

The stock of Pills Berry Company is currently selling at $75 per share. The firm pays a dividend of $2.75 per share.

What is the annual dividend yield? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

If the firm has a payout rate of 50 percent, what is the firm’s P/E ratio? (Do not round intermediate calculations and round your answer to 2 decimal places.)

The stock of Pills Berry Company is currently selling at $75 per share. The firm pays a dividend of $2.75 per share.

Explanation / Answer

a. Dividend yield - $ 2.75 / $ 75 X 100 = 3.67 %

b. DIvidend payout is 50%

Hence, retained earnings would also be $ 2.75 per share only (balance 50%)

P/E Ratio = 75/2.75 = 27.27 times

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