You have just graduated and landed a job as a junior analyst in the Equities Division of National Bank Ltd. Your new manager has presented you with the following information: Company C R20 Company D R25 Share Price No. of ordinary shares in issue 7 million 6 million Market Capitalisation R150 million R160 million Annual Earnings 2 R30 million R35 million Earnings per Share R4,29 R5.83 Required: Q.3.1 Calculate the Price earnings (P/E) ratio for both companies. (4) Q.3.2 Assuming that company C has a dividend payout ratio of 30%, calculate the dividend (2) per share for company C. Q.3.3 Calculate he dividend yield for company C. (2) Q.3.4 Assuming that company D has a dividend yield of 7%, calculate the dividend payout (5) ratio of company D. Q.3.5 With reference to your answers in questions Q.3.1 to Q.3.4, draft a memorandum to (5) management in which you make a recommendation as to which company would be the better investment. Your recommendation should be substantiated with reasons. Q.3.6 Name the two methods that investors use to make money on the stock market. (2)