Ask Question
29 August, 03:16

A company declares a cash dividend that is 10% higher than the previous dividend rate. Prior to the announcement, the annual dividend yield was 8% and the stock was trading at $25 per share. What is the new dividend payment amount per share?

A. $.45

B. $.50

C. $.55

D. $.60

+2
Answers (1)
  1. 29 August, 03:55
    0
    The answer is C.

    Explanation:

    Before announcement, the annual dividend yield would be:

    0.08 x $25

    $2/year.

    Now there is a 10% increase (is 10% higher than the previous dividend rate).

    So, the new dividend payment amount per share:

    1.1 x 2

    $2.2/year.

    Therefore, quarterly dividend payment amount per share will be $2.2/4

    = $0.55 or $.55
Know the Answer?