Donner Corporation had net income of $400,000 and paid dividends to common stockholders of $40,000 in 2013.The weighted average number of shares outstanding in 2013 was 50,000 shares.Donner Corporation's common stock is selling for $50 per share on the New York Stock Exchange.Donner Corporation's payout ratio for 2013 is

Question

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The payout ratio is calculated by dividing the dividends paid to common stockholders by the net income. In this case, the payout ratio is $40,000/$400,000 = 10%.

Donner Corporation Had Net Income of $400,000 and Paid Dividends