Tulia Dairy pays a $2.50 cash dividend and earns $5.00 pershare. The cash divide

Question

Tulia Dairy pays a $2.50 cash dividend and earns $5.00 pershare.   The cash dividend has recently been increased to$2.65 per share, and a 3 percent stock dividend has beendeclared. What is the effective rate of increase in the dividends forTulia as a result of this action? Tulia Dairy pays a $2.50 cash dividend and earns $5.00 pershare.   The cash dividend has recently been increased to$2.65 per share, and a 3 percent stock dividend has beendeclared. What is the effective rate of increase in the dividends forTulia as a result of this action?

Explanation / Answer

Tulia Dairy pays CashDividend = $2.50 per share Earning Per Share (EPS) = $5 per share The Cash dividend has been recentlyincreased to = $2.65 per share Effective Rate of Increase = ($2.65 -$2.50) / $2.50 Effective Rate of Increase = $0.15 / $2.50 Effective Rate of Increase = 0.06 (or) 6% Effective Rate of Increase =6% Tulia Dairy pays CashDividend = $2.50 per share Earning Per Share (EPS) = $5 per share The Cash dividend has been recentlyincreased to = $2.65 per share Effective Rate of Increase = ($2.65 -$2.50) / $2.50 Effective Rate of Increase = $0.15 / $2.50 Effective Rate of Increase = 0.06 (or) 6% Effective Rate of Increase =6%

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