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 ex-dividend,how many shares of stock will Marcus receive in the next dividend period if he chooses the dividend reinvestment plan?

Question

Quizplus · Accepted Answer

First, we need to calculate the amount of cash dividend Marcus will receive:
$0.50 x 500 shares = $250

Next, we need to calculate how many additional shares Marcus will receive if he chooses to reinvest the dividends:
$250 / $128 = 1.953

Therefore, Marcus will receive 1.95 additional shares (rounded to two decimal places) if he chooses the dividend reinvestment plan. The answer is C.

Marcus Owns 500 Shares of Pharmacon Inc