If Wiper's stock had a price/earnings ratio of 14 at the end of 2020, what was the market price of the stock? (Round intermediate calculations and final answer to 2 decimal places.) f. Calculate the cash dividend per share for 2020 and the dividend yield based on the market price calculated in part
Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.
Dividend Discount Model
Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.
Capital Gains Yield
It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.
Stock Valuation
In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.
Dear Bartleby, I need help calculating the dividend yield
e. If Wiper's stock had a price/earnings ratio of 14 at the end of 2020, what was the market price of the stock? (Round intermediate calculations and final answer to 2 decimal places.)
f. Calculate the cash dividend per share for 2020 and the dividend yield based on the market price calculated in part e. (Round intermediate calculations and final answers to 2 decimal places.
Presented here are summarized data from the balance sheets and income statements of Wiper Inc.:
| WIPER INC. | |||||||||
| Condensed Balance Sheets | |||||||||
| December 31, 2020, 2019, 2018 | |||||||||
| (in millions) | |||||||||
| 2020 | 2019 | 2018 | |||||||
| Current assets | $ | 650 | $ | 900 | $ | 700 | |||
| Other assets | 2,750 | 2,050 | 1,750 | ||||||
| Total assets | $ | 3,400 | $ | 2,950 | $ | 2,450 | |||
| Current liabilities | $ | 500 | $ | 800 | $ | 700 | |||
| Long-term liabilities | 1,500 | 1,000 | 800 | ||||||
| 1,400 | 1,150 | 950 | |||||||
| Total liabilities and stockholders' equity | $ | 3,400 | $ | 2,950 | $ | 2,450 | |||
| WIPER INC. | ||||||
| Selected Income Statement and Other Data | ||||||
| For the year Ended December 31, 2020 and 2019 | ||||||
| (in millions) | ||||||
| 2020 | 2019 | |||||
| Income statement data: | ||||||
| Sales | $ | 3,300 | $ | 2,900 | ||
| Operating income | 380 | 300 | ||||
| Interest expense | 80 | 70 | ||||
| Net income | 300 | 230 | ||||
| Other data: | ||||||
| Average number of common shares outstanding | 44 | 42 | ||||
| Total dividends paid | $ | 50 | $ | 30 | ||
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