The stock of North American Dandruff Company is selling at $80 per share. The firm pays a dividend of $2.50 per share.
| (a) | What is the dividend yield? (Round your answer to 3 decimal places. Omit the “%” sign in your response.) |
| Dividend yield | % |
| (b) | If the firm has a payout rate of 50 percent, what is the firm’s P/E ratio? (Enter numeric value only.) |
| P/E ratio |
We have provided with the information that ,
The stock of North American Dandruff Company is selling at $80 per share.
The firm pays a dividend of $2.50 per share.
So market price P = $ 80
Devidend Do = $ 2.50
(A) What is the dividend yield
= Cash Devidend / price
= 2.50 /80
=0.0315 =
=3.15%
(B) If the firm has a payout rate of 50 percent, what is the firm’s P/E ratio
Earning per share = Cash devidend / Pay out Ratio
= $ 2.5/ 0.5
= $ 5
PE ratio = Price / Earning per share
= $ 80 / $ 5
= 16
Particular
Answer
Dividend yield
3.125%
P/E ratio
16
