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Q2. The following information is related to PQR company and XYZ company for the year 2013: POR XYZ Company 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