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The market price for Microsoft Corporation closed at $55.48 and $46.45 on December 31, current year, and previous year, respectively. The dividends per share were $1.24 for current year and $1.12 for previous year. a. Determine the dividend yield for Microsoft on December 31, current year, and previous year. Round percentages to two decimal places. b. Interpret these measures.

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Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124

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BuyFindarrow_forward

Financial Accounting

15th Edition
Carl Warren + 2 others
Publisher: Cengage Learning
ISBN: 9781337272124
Chapter 15, Problem 26E
Textbook Problem
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The market price for Microsoft Corporation closed at $55.48 and $46.45 on December 31, current year, and previous year, respectively. The dividends per share were $1.24 for current year and $1.12 for previous year.

  1. a. Determine the dividend yield for Microsoft on December 31, current year, and previous year. Round percentages to two decimal places.
  2. b. Interpret these measures.

(a)

To determine

Calculate the dividend yield for Corporation M, for current and previous years.

Explanation of Solution

Dividend yield: This is the ratio which measures the amount of dividends paid relative to the market price.

Formula for dividend yield:

Dividend yield = Dividend price per share of common stockMarket price per share of common stock

Determine the dividend yield for Corporation M, for current year, if annual dividend of common stock was $1.24 per share, and market price per share of common stock was $55.48.

Dividend yield = Dividend per share of common stockMarket price per share of common stock$1.24$55

(b)

To determine

Explain the changes in dividend yield.

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Chapter 15 Solutions

Financial Accounting
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