Q.1 The following information is related to PQR company and XYZ company for the year 2013:

	PQR Company	XYZ Company
Cash dividend declared and paid during the year	$750,000	$124,800
Common stock	$25,000,000	$12,000,000
Number of shares of common stock outstanding	50,000	24,000
Par value of a share	$50	$50
Market value of a share	$60	$52

Both the companies belong to same industry. PQR is an old and well-established company where as XYZ is a new company. The historical data shows that the PQR has a stable annual dividend distribution to stockholders.

Required:

Calculate dividend yield ratio of both the companies. Which company would you recommend for investment in shares? Explain with reasons. (3 Marks)