Take a Test Kayla Wright Google Chrome a Secure httpswwwmath

Take a Test Kayla Wright Google Chrome a Secure https://www.mathal.com/Student/PlayerTest aspxtestid 184279233icenterwin yes ACCT 205-41 CRN#14088 Kayla Wright 7/1/18 11:17 PM Test: Exam I (Chapter 14 &15) Time Remaining: 004041 Submit Tes This Question: 1 pt 41 of 38 (0 complete) This Test: 38 pts possit Edelman, Inc provides the following information for 2017 Net income Market price per share of common stock Dividends paid Common stock outstanding at Jan. 1, 2017 Common stock outstanding at Dec. 31, 2017 $280,000 $35.00share $1.00ishare 130,000 shares 140,000 shares The company has no preferred stock outstanding Calculate the dividend payout ratio. (Round any intermediate caloulations and your final answer to two decimal places,) OA ??. OC, OD. 48.31% 3500% 24.55% 46.54% Click to select your answer 159om ere to search

Solution

Average Number of shares = (Common Stock Outstanding, Jan. 01, 2017 + Common Stock Outstanding, Dec. 31, 2017) / 2
Average Number of shares = (130,000 + 140,000) / 2
Average Number of shares = 135,000

EPS = (Net Income - Preferred Dividend) / Average Number of shares
EPS = ($280,000 - $0) / 135,000
EPS = $2.074

Dividend per share = $1.00

Dividend Payout Ratio = Dividend per share / EPS
Dividend Payout Ratio = $1.00 / $2.074
Dividend Payout Ratio = 0.4831
Dividend Payout Ratio = 48.31%