A firm that pays out 65% of its earnings as dividends has an accounting rate of return

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A firm that pays out 65% of its earnings as dividends has an accounting rate of return of 20%.
Its P/E ratio is 10 and its earnings per share is 108 cents.

(i) What is the price per share?

(ii) What is the dividend yield?

(iii) If shares were bought, what would be the payback period? Assume the only return is the dividend.

Related Book For answer-question

Fundamentals of Corporate Finance

ISBN: 978-1259722615

9th edition

Authors: Richard Brealey, Stewart Myers, Alan Marcus

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Posted Date: Jul 11, 2019 09:55 AM

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A firm that pays out 65% of its earnings as dividends has an accounting rate of return

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