XYZ Company has sales of $4,800,000, COGS is 40% of sales, operating expenses ar
ID: 2720141 • Letter: X
Question
XYZ Company has sales of $4,800,000, COGS is 40% of sales, operating expenses are $2,100,000, interest expense $20,000 and depreciation 30,000. Tax rate 40%. Dividend payout is 40%.
5. They have 100,000 shares of common stock outstanding, what is their dividend per share? Round to hundredth
1.75
.96
2.74
2.70
6. What is their EPS?
4.80
4.38
4.56
2.40
7. What is the current dividend yield if P0 is $50? Taken to tenth
8.8%
5.4%
5.5%
3.5%
8. If they were to change their dividend payout to 50%, what would their dividend per share be?
Explanation / Answer
Operating income before tax = sales -expenses
= 4,800,000 - (4,800,000 *.40) -2,100,000- 20,000 - 30,000
= 730,000
less:Taxes (292,000) [730,000*.40]
Income after tax = 438,000
5) Dividend payout = 438,000 * .40 = $ 175,200
Dividend per share =dividend /number of shares
= 175,200 / 100,000
= $ 1.752 per share (approx 1.75)
correct option is "A"
6)EPS =income after tax /number of shares
= 438,000 /100,000
= $ 4.38 per share
correct option is "B"
7)current dividend yield =D1 /P0
= 1.75/ 50
= .035 or 3.50%
correct option is "D"
8)Dividend = 438,000 *.50 = 219,000
dividend per share = 219000/100000
= $ 2.19 per share
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