Answer:
A) $191.08
B) The annual dividend = $0.85 per share
dividend yield = 1.78%
C) 3.14%
D) 13.74
E) $13.91
F) IBM's P/E at 13.74 is higher than Exxon Mobil P/E at 11.29
G) The possible reasons for the difference in P/E is due to the difference in EPS earned by each company and also the difference in stock price of each company's stock
Explanation:
Referring the the recent issue of the wall street Journal at NYSE-Composite Transactions
A) The Latest price of IBM stock = $191.08
B) What are the annual dividend payment and the dividend yield on IBM stock
The annual dividend = $0.85 per share
dividend yield = 1.78%
C) calculate what the yield will become if yearly dividend is moved up to $1.50
first we find the price per share
price per share = annual dividend per share / current dividend yield
= 0.85 / 1.78% = 0.85 / 0.0178 = $47.75
since we now have the price per share value we can now calculate the dividend yield
dividend yield = annual dividend / price per share
= $1.50 / $47.75 = 0.0314
= 3.14 %
D) Calculate the P/E on IBM stock
= 13.74 times as it was traded for the last 12 months
E) calculate IBM's earnings per share using P/E
earnings per share = Price / P/E
Latest price of IBM stock = $191.08
P/E = 13.74
earnings per share = 191.08 / 13.74 = $13.91
F) IBM's P/E at 13.74 is higher than Exxon Mobil P/E at 11.29
G) The possible reasons for the difference in P/E is due to the difference in EPS earned by each company and also the difference in stock price of each company's stock
