Question

Solution a:

Earning per share = (Net income - Preferred dividend) /outstanding common shares

= (\$556,000 - 20000*\$4) /170000 = \$2.80 per share

Solution b:

Price earning ratio = Market price per share / Earning per share = \$19.60 / \$2.80 = 7 times

Solution c:

Dividend per share = \$42,500 / 170000 = \$0.25 per share

solution d:

Dividend yield = DPS / MPS = \$0.25 / \$19.60 = 1.28%

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