Bender Corporation had sales of $250,000 last year.They had operating costs of $100,000,an interest expense of $15,000,and had an average tax 32%.Assuming Bender wants to have a 60% payout ratio and has 1,000 shares outstanding,what is Bender's expected dividend per share?

Question

Quizplus · Accepted Answer

First, calculate the net income: Sales - Operating Costs - Interest Expense = $250,000 - $100,000 - $15,000 = $135,000. Then, calculate the after-tax income: $135,000 * (1 - 0.32) = $91,800. With a 60% payout ratio, the total dividends paid would be $91,800 * 0.60 = $55,080. Dividing by 1,000 shares, the dividend per share is $55.08.

Bender Corporation Had Sales of $250,000 Last Year