Marcus owns 500 shares of Pharmacon Inc. The firm has a quarterly dividend policy of $0.50 per share or the option to reinvest the cash dividends into additional shares of company stock. If the stock is selling for $128.00 per share, how many shares of stock will Marcus receive in the next dividend period if he chooses the dividend reinvestment plan?

Question

Quizplus · Accepted Answer

Marcus owns 500 shares and each share is entitled to a quarterly dividend payout of $0.50. Therefore, his total dividend payout would be:
500 x $0.50 = $250

If Marcus chooses to reinvest his dividends in additional shares of the company's stock, he'll receive $250 worth of additional shares. To calculate how many shares he will receive, we can divide $250 by the current stock price:

$250 / $128.00 = 1.95 shares (rounded to two decimal places)

Therefore, Marcus will receive 1.95 shares of stock if he chooses the dividend reinvestment plan.

Marcus Owns 500 Shares of Pharmacon Inc