ZuoTi.Pro
Question

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

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

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1
Dividend per share:
PQR XYZ
Total Dividend 750000 124800
Divide: Shares outstanding 50000 24000
Dividend per sahre 15 5.2
Dividend Yield Ratio
PQR XYZ
Dividend per share 15 5.2
Divide: Market price per share 60 52
Dividend yield ratio 25% 10%
Dividend Yield ratio of PQR is better than XYZ with the past history of stable dividend policy.
XYZ is a newly established with no stable policy been observed in the past due to no history.
Therefore,
Investment in Shares of PQR is recommended
0 0
Add a comment
Know the answer?
Add Answer to:
The following information is related to PQR company and XYZ company for the year 2013: PQR...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • XYZ Company had 200,000 shares of common stock outstanding on December 31, 2017. On July 1, 2018, XYZ issued an additional 45,000 shares for cash. On January 1, 2018, XYZ issued 15,000 shares of conv...

    XYZ Company had 200,000 shares of common stock outstanding on December 31, 2017. On July 1, 2018, XYZ issued an additional 45,000 shares for cash. On January 1, 2018, XYZ issued 15,000 shares of convertible preferred stock. The preferred stock had a par value of $100 per share and paid a 5% dividend. Each share of preferred stock is convertible into 8 shares of common. During 2018 XYZ paid the regular annual dividend on the preferred and common stock. Net...

  • The XYZ Company currently (that is, as of year 0) pays a common stock dividend of...

    The XYZ Company currently (that is, as of year 0) pays a common stock dividend of $1.5 per share. Dividend are expected to grow at a rate of 11% per year for the next 4 years and then continue growing thereafter at a rate of 5% per year. What is the current value of a share of Seneca common stock to an investor who require a 14% rate of return? Hint: The dividend growth rate g(t) changes during the history....

  • XYZ Company is considering a new project which has the same risk level as its current...

    XYZ Company is considering a new project which has the same risk level as its current business. The new project has an initial cash outlay of $40,000 and projected cash inflows of $15,000 in year one, $10,000 in year two, and $10,000 in year three. XYZ Corporation has 16 million shares of common stocks, 1.2 million shares of preferred stocks and 0.3 million units of bonds outstanding. The bond has 2 years to maturity. Each bond sells for $1,000 (same...

  • 1.) Presented below is information related to Wally Company: Prepare the general journal entries necessary to record the...

    1.) Presented below is information related to Wally Company: Prepare the general journal entries necessary to record the following transactions: (a) The company is granted a charter that authorizes issuance of 15,000 shares of $100 par value preferred stock and 40,000 shares of no-par common stock. (b) 12,000 shares of common stock are issued to the founders of the corporation for land valued by the board of directors at $400,000. The board established a stated value of $10 per share...

  •     The equity sections from Atticus Group’s 2013 and 2014 year-end balance sheets follow.   Stockholders’ Equity...

        The equity sections from Atticus Group’s 2013 and 2014 year-end balance sheets follow.   Stockholders’ Equity (December 31, 2013)   Common stock—$4 par value, 100,000 shares     authorized, 40,000 shares issued and outstanding $ 160,000    Paid-in capital in excess of par value, common stock 120,000    Retained earnings 320,000         Total stockholders’ equity $ 600,000                  Stockholders’ Equity (December 31, 2014)   Common stock—$4 par value, 100,000 shares     authorized, 47,400 shares issued, 3,000 shares in treasury $ 189,600   Paid-in capital in excess of...

  • The current (year 0) price of the shares of Company XYZ is $50. There are 1...

    The current (year 0) price of the shares of Company XYZ is $50. There are 1 million shares outstanding. Next year (year 1)’s dividend per share is $2, which represents a 60% payout from earnings (net income). Investors expect a ROE of 20%, and a constant growth. (Please solve e, f, g. Ignore a - d) (Please show your work) a. What will be the dividend per share in year 2 and year 3? b. What is the current market...

  • 1. XYZ Company has the following information from its charter. Common Stock, $2 par, 250,000 shares...

    1. XYZ Company has the following information from its charter. Common Stock, $2 par, 250,000 shares authorized Preferred Stock, 7%, $20 Par, 10.000 shares authorized Jan. 3 Issued 5,000 shares of common stock at $14 per share. Jan. 15 Issued 1,200 shares of preferred stock at $62 per share. Mar. 23 Declared a Cash Dividend of $0.50 per share to common stockholders and $1.40 per share to preferred stockholders. Date of record is Mar. 30. Apr. 5 Paid the cash...

  • Company XYZ has 2,000 shares of 6%, $100 par value, cumulative preferred stock and 4,000 common...

    Company XYZ has 2,000 shares of 6%, $100 par value, cumulative preferred stock and 4,000 common shares outstanding. A $40,000 dividend is declared by the company's board of directors in the current financial report. Assuming there are $6,000 dividends in arrears from the previous financial year, what are the dividends paid to preferred shareholders and common shareholders, respectively? A. Preferred stock: $9 per share; Common stock: $7.5 per share B. Preferred stock: $6 per share; Common stock: $5.5 per share...

  • Dividend Distribution Gardner Corporation began business on June 30, 2013. At that time, it issued 20,000...

    Dividend Distribution Gardner Corporation began business on June 30, 2013. At that time, it issued 20,000 shares of $50 par value, six percent, cumulative preferred stock and 90,000 shares of $10 par value common stock. Through the end of 2015, there had been no change in the number of preferred and common shares outstanding. Required a. Assume that Gardner declared dividends of $62,700 in 2013, $0 in 2014, and $345,000 in 2015. Calculate the total dividends and the dividends per...

  • Use the stock table below to answer a through. Asume that the data for Company XYZ...

    Use the stock table below to answer a through. Asume that the data for Company XYZ stock came from an online quote you looked at during lunch Market Cap 5 milions) PE Dividendes quarter) 52. Wock High 23.35 52-Week Low 10.53 Dividend Yield Shares Olanding ins) a. What is the symbol for Company XYZ stock? The symbol is XYZ b. What was the price per share at the end of the day yesterday? $ (Round to the nearest cent as...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT