Question

The following information is available for Payton Incorporated. At the end of the year, the market price of its common stock is $550 per share. Earnings per share totaled $100 and dividends per share in the amount of $15 were paid during the year. The dividend yield is:

Answer 1

To calculate the price per share of stock in Babble, Inc., we need to determine the present value of the expected future profits and dividends. Using a 15% interest rate, we can calculate the present value of each year's profit and add them together. Next, we sum up the present values of the profits and divide it by the number of shares (200) to get the price per share. In this case, the price per share would be approximately $72,857.

Step-by-step explanation:

To calculate the price per share of stock in Babble, Inc., we need to determine the present value of the expected future profits and dividends. Using a 15% interest rate, we can calculate the present value of each year's profit and add them together. In this case, the present value of $15 million, $20 million, and $25 million is $5.59 million, $4.81 million, and $4.17 million, respectively.

Next, we sum up the present values of the profits and divide it by the number of shares (200) to get the price per share. In this case, the sum is $14.57 million, so the price per share would be approximately $72,857.

Answer 2

Dividends yield 2.72%

Step-by-step explanation:

dividends yield formula:

`(annual\: dividends)/(share \:price)  * 100 = dividends\: yield`

dividends 15

market price 550

The earning per share are not relevant for calculation.

15/550 = 0.027272727

Dividend yield 2.72%

This means that if an investor purchase the share at current price and the dividends remains at the same value, his investment will yield 2.72% per year