Question

Helmuth inc's latest net income was $1,410,000, and it had 225,000 shares outstanding. the company wants to pay out 45% of its income. what dividend per share should it declare? do not round your intermediate calculations.

O $3.13
O $2.96
O $2.37
O $2.45

Answer 1

The dividend per share Helmuth Inc. should declare is $2.82, obtained by multiplying their net income by the payout ratio and then dividing by the number of shares outstanding.

Step-by-step explanation:

The correct answer is option $2.82. To calculate the dividend per share, first, we need to determine the total amount of money Helmuth Inc. wants to pay out as dividends. We do this by calculating 45% of its net income of $1,410,000 which gives us $634,500 in total dividends (1410000 * 0.45 = 634500). Next, we divide this amount by the total number of shares outstanding, which is 225,000, to find the dividend per share. So the calculation is $634,500 / 225,000 = $2.82 per share.

To determine the dividend per share, you need to multiply the net income by the payout ratio and then divide by the number of shares outstanding. In this case, the net income is $1,410,000 and the payout ratio is 45%. The dividend per share is calculated as follows:

$1,410,000 * 0.45 / 225,000 = $2.37

Therefore, the company should declare a dividend of $2.37 per share.