Answer:
(a) the earnings per share = $3
(b) the price-earnings ratio = 8x
(c) the dividends per share = $0.25
(d) the dividend yield = 1.04%
Explanation:
Common Stock Outstanding = 5,250,000/25 = 210,000 shares
Preferred Stock Outstanding = 6,000,000/200 = 30,000 shares
Preferred Stock Dividend per share = $4
(a) Earnings Per Share
EPS = <u>Net Income - Preferred Dividend</u>
Common Stock Outstanding
EPS = <u>750,000 - (30,000 * 4)</u>
210,000
EPS = <u>630,000</u>
210,000
EPS = $3
(b) Price-Earnings Ratio
Market Price = $24
EPS = $3
P/E ratio = <u>Market Price</u>
EPS
P/E ratio = 24/3
P/E ratio = 8x
(c) Dividends Per Share
DPS = <u> Total Dividends </u>
Common Stock Outstanding
DPS = 52,500/210,000
DPS = $0.25
(d) Dividend Yield
DY = <u>Dividend Per Share</u>
Price
DY = 0.25/24
DY = 1.04%
