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please answer the following question: The shares of Dyer Drilling Co. sell for $25. The firm...

please answer the following question:

The shares of Dyer Drilling Co. sell for $25. The firm fas a P/E ratio of 10, and 20 percent of earnings are paid out in dividends. What is the dividend yield?

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Answer #1

P/E Ratio = Market Price per share / Earnings per share

10 = $ 25 / Earnings per share

Earnings per share = $ 25 /10

= $ 2.50

Dividend = Earnings per share * Dividend Payout

= $ 2.50 * 20%

= $ 0.50

Dividend Yield = Dividend / Current Price * 100

= $ 0.50 / 25* 100

= 2%

Hence, the correct answer is 2.00%

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