Ask Question
30 March, 11:11

Here are data on two stocks, both of which have discount rates of 8%: Stock A Stock B Return on equity 8 % 5 % Earnings per share $ 2.60 $ 1.80 Dividends per share $ 1.30 $ 1.30 What are the dividend payout ratios for each firm? (Enter your answers as a percent rounded to 2 decimal places.)

+5
Answers (1)
  1. 30 March, 11:21
    0
    The dividend payout ratios for each firm are 50% and 72.22%

    Explanation:

    Dividend Payout Ratio Is the measure of the percantage of net income that is distributed to the shareholders in the form of dividends.

    Dividend Payout Ratio = Dividend paid / Net Income

    Stock A:

    Dividend Payout Ratio = Dividend paid / Net Income

    = 1.3/2.60

    = 50%

    Stock B:

    Dividend Payout Ratio = Dividend paid / Net Income

    = 1.3/1.8

    = 72.22%

    Therefore, The dividend payout ratios for each firm are 50% and 72.22%
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Here are data on two stocks, both of which have discount rates of 8%: Stock A Stock B Return on equity 8 % 5 % Earnings per share $ 2.60 $ ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers