Sperle Corporation has provided the following data concerning its stockholders' equity accounts: Net income for Year 2 was $30,400. Dividends on common stock during Year 2 totaled $6,400. The market price of common stock at the end of Year 2 was $3.08 per share. The company's dividend yield ratio for Year 2 is closest to:
A)21.1%
B)2.6%
C)1.6%
D)14.7%

Question

Sperle Corporation has provided the following data concerning its stockholders' equity accounts:  Net income for Year 2 was $30,400. Dividends on common stock during Year 2 totaled $6,400. The market price of common stock at the end of Year 2 was $3.08 per share. The company's dividend yield ratio for Year 2 is closest to:
A)21.1% 
B)2.6% 
C)1.6% 
D)14.7%

Quizplus · Accepted Answer

Dividend yield ratio is calculated by dividing the dividends paid per share by the market price per share.

Dividends per share = Total dividends on common stock / Number of common shares outstanding
Dividends per share = $6,400 / 4,000 shares = $1.60 per share

Dividend yield ratio = Dividends per share / Market price per share
Dividend yield ratio = $1.60 / $3.08 = 0.5195 = 2.6% (rounded to one decimal place)

Therefore, the answer is B) 2.6%.

Sperle Corporation Has Provided the Following Data Concerning Its Stockholders