A Waterloo ﬁrm with net income of $500,000 pays 48% of net income out in dividends. If the ﬁrm has 150,000 shares of common stock outstanding, what is the dividend paid per share of stock?
A) $0.30
B) $1.44
C) $1.60
D) $1.73
E) $3.33

Question

Quizplus · Accepted Answer

Step 1: Calculate the total dividend payout
- Net income = $500,000
- Dividend payout ratio = 48%
- Total dividends = Net income x Dividend payout ratio 
= $500,000 x 48% 
= $240,000

Step 2: Calculate the dividend per share
- Dividend per share = Total dividends / Number of shares 
= $240,000 / 150,000 
= $1.60 per share

Therefore, the dividend paid per share of stock is $1.60, which is choice C.

A Waterloo ﬁRm with Net Income of $500,000 Pays 48