Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Payout Ratio and Book Value per Share Divac Company has developed a statement of stockholders' equity for the year 2017 as follows: Preferred Stock Paid-In

Payout Ratio and Book Value per Share

Divac Company has developed a statement of stockholders' equity for the year 2017 as follows:

Preferred Stock Paid-In Capital Preferred Common Stock Paid-In Capital Common Retained Earnings
Balance, Jan. 1 $100,000 $50,000 $400,000 $40,000 $200,000
Stock issued 100,000 10,000
Net income 69,000
Cash dividend -31,000
Stock dividend 10,000 5,000 -15,000
Balance, Dec. 31 $110,000 $55,000 $500,000 $50,000 $223,000

Divacs preferred stock is $100 par, 8% stock. If the stock is liquidated or redeemed, stockholders are entitled to $120 per share. There are no dividends in arrears on the stock. The common stock has a par value of $10 per share. Assume that the common stockholders have a right to the total net income of $69,000.

Required:

1. Determine the dividend payout ratio for the common stock. Round the payout ratio to four decimal places, but enter as a percentage to two decimal places. For example, .34678 rounds to .3468 and would be entered as 34.68, indicating 34.68%.

2. Determine the book value per share of Divacs common stock. Round the book value per share to two decimals.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Financial Management

Authors: Brigham, Daves

10th Edition

978-1439051764, 1111783659, 9780324594690, 1439051763, 9781111783655, 324594690, 978-1111021573

More Books

Students also viewed these Finance questions

Question

Please help me calculate highlighted part, thank you!

Answered: 1 week ago