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ezto.mheducation.com/hm.tpx?--0.28828481774 39272_1537300874 557 ps Bookmarks Homepage - MGM...D My Weekly Schedule Coinbase Khan Academy I F.. Y value 0.00 points Problem 2-2 Dover River Company has current operating profit of $290,000 before taxes. Interest expense is $15,000, dividends paid on preferred shares were $24,500, and common dividends paid of $36,000. The company paid taxes of $70,500. The company has 30,000 outstanding common shares. a. Calculate the EPS and common dividends per share. (Round the final answers to 2 decimal places.) Earnings per share Common dividends per share b. Calculate the payout ratio. (Do not round intermedlate calculations. Round the final answer to 2 decimal places.) ayout ratio Determine the increase in retained earnings for the year. Increase in retained earmings c. d. If the share price is $31.80, calculate the price-eamings (P/E) ratio. (Do not round intermediate calculations. Round the final answer to 2 decimal places.) References Worksheet Problem 2-2 Learning Objec

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Solution Income Statement EBIT 290000 Less:- Interest 15000 EBT 275000 Less :- Tax Expense 70500 EAT 204500 Less:- Preference Dividend 24500 EAE 180000 No. of Equity Shares 30000 EPS 6 Solution (a) EPS = 6 Common dividend per share = Common Dividend / Equity Shares 36000/30000 1.2 Solution (b) Payout Ratio = Dividend Paid / Earnings 36000 / 180000 20% Solution © Earnings 180000 Dividend Paid 36000 Retained Earnings 144000 Increase in retained earnings =    144000 Solution (D) Market Price per share (MPS) = 31.8 Earning per share (EPS) = 6 Price Earning Ratio   = MPS / EPS 31.8/6 = 5.3 5.3 times EBIT is Earning before interest and taxes EAT earning after tax EAE is Earnings for equity

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