Question

a) Lockhart’s Bookstores is trading at $54 per share. There are 280 million shares outstanding. what is the market capitalization of the company?

   b) The MedTech company recently reported net profits after taxes of $15.8million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $ 1 million per year.

1. compute the firm’s earnings per share (EPS)

    (II) Assuming that the stock currently trades at $60 per share, determine what the firm’s dividend yield would be if it paid $2 per share to common stockholders.

    (iii) what would the firms dividend payout ratio be if it paid $2 per share in dividends ?

Answer 1

Please provide rating.

Answser a)
	Share price		$              54
	Outstanding share =		280	million
	Market capitalization of the company = Share price * number of outstanding share
			=54*280million
			$      15,120	million
Answer b)i)
A	Net profits after taxes			15.8	million
B	Annual preferred dividends			1	million
C=A-B	Net income available to common share holder			14.8	million
D	number of common stock outstanding			2.5	million
	EPS = Net income avaiable to common stock/ Number of common stock outstanding
E	EPS =C/D			$     5.92
Answer b)ii)	firm’s dividend yield = Common dividend / Stock price
A	stock price			$         60
B	Common divided per share			$           2
C=B/A	Dividend yield			3.33%
Answer b)iii)	dividend payout ratio = Dividend per share / Eearning per share (EPS)
A	Dividend per share			$           2
B	Earning per share			$     5.92
C=A/B	Dividend payout ratio			33.78%