Question

Emerson Inc. would like to undertake a policy of paying out 45% of its income. Its latest net income was $1,250,000, and it had 225,000 shares outstanding.
What dividend per share should it declare?

Answer 1

Answer:

Emerson Inc. should declare $2.5 per share.

Explanation:

Dividend Payout ratio is the ratio of distribution of net income earned during the period among the stockholders.

As per given data

Net Income = $1,250,000

Payout ratio = 45%

Dividend payment = 1,250,000 x 45% = $562,500

Dividend per share = $562,500 / 225,000 = $2.5 per share