Recher Corporation\'s common stock has a par value of $3 per share and has been

Question

Recher Corporation's common stock has a par value of $3 per share and has been stable at a total value of $270,000 on the company's balance sheet for several years. The total stockholders' equity at the end of this year was $1,023,000 and at the beginning of the year was $1,010,000. Net income for the year was $17,500. Dividends on common stock during the year totaled $4,500. The market price of common stock at the end of the year was $3.76 per share. The company's dividend yield ratio is closest to (Ch.15):

Explanation / Answer

Dividend yield ratio = Dividend per share / market price per share

                                     = .05 / 3.76

                                    =1.3%

Number of shares   = 270,000/3 = 90,000 common shares

Dividend per share = 4,500/90,000 = $.05 per share

Dividend yield ratio = Dividend per share / market price per share

                                     = .05 / 3.76

                                    =1.3%

Number of shares   = 270,000/3 = 90,000 common shares

Dividend per share = 4,500/90,000 = $.05 per share

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