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Chapter 1: Problem 6

Mike owned \(3,000\) shares of Merck Corporation and received a quarterly dividend check for \(\$ 1,140 .\) What was the annual dividend for one share of Merck?

Short Answer

Expert verified
So the annual dividend for one share of Merck is found by multiplying the result of step 2 by 4. Therefore, the annual dividend per share is \(\$ 1.52\).

Step by step solution

01

Calculate the Quarterly Dividend per Share

To find the quarterly dividend for a single share, simply divide the total dividends received ($ 1,140) by the number of shares owned (3,000). This can be done as follows: \(\frac{\$ 1,140}{3,000}\)
02

Calculate the Annual Dividend per Share

The result of step 1 gives us the dividend per share for a single quarter. Annualize this value by multiplying it by 4. That is, \(\frac{\$ 1,140}{3,000} \times 4 \)

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Key Concepts

These are the key concepts you need to understand to accurately answer the question.

Quarterly Dividend
Quarterly dividends are a common way for companies to distribute profits to shareholders. Think of them as a way for the company to share its success with its investors on a regular basis. Typically, companies that issue quarterly dividends send out these payments every three months, hence the term "quarterly." Each payment is called a quarterly dividend.

The calculation of a quarterly dividend starts by determining the amount paid per share. In Mike's case, he received $1,140 for his 3,000 shares. To find out how much was paid per share each quarter, you simply divide the total dividend by the number of shares:
  • Divide 1140 by 3000 to get the quarterly dividend per share.
Understanding quarterly dividends is essential for investors; they provide a predictable income and can indicate the financial health and operational success of a company.
Annual Dividend
The annual dividend represents the total cash distribution a shareholder receives from a company over the span of a year, based on their number of shares. Different from the quarterly dividend, the annual dividend gives you an overview of the potential income from your investment annually. It is calculated by summing up all the quarterly dividends received for a year.

In our example, after calculating the quarterly dividend per share (as we did in the previous section), you multiply that by 4, as there are 4 quarters in a year:
  • Use the formula: quarterly dividend per share 脳 4 = annual dividend per share.
This formula helps investors understand the yearly income they might expect, which is important for planning financial goals and assessing the return on investment.
Shares Ownership
Shares ownership refers to the number of shares an investor holds in a particular company. In Mike's situation, owning 3,000 shares means he has a stake in Merck Corporation. Owning shares makes you a part-owner, giving you not only a say in certain company matters through voting rights but also entitlement to a portion of the company's earnings in the form of dividends.

The number of shares you own directly affects the amount of dividends you receive. The more shares you own, the larger your total dividend payment will be. It's crucial to keep in mind:
  • The dividend depends on the company's decision and profitability, and is not always guaranteed.
  • Owning a larger number of shares increases your influence in shareholder decisions.
Shares ownership is a key aspect of investing, as it determines both your financial and participative involvement in a company's operations.

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Most popular questions from this chapter

Use the spreadsheet below to answer Exercises 12鈥�16. $$\begin{array}{|c|c|c|c|c|c|c|c|c|}\hline { } & {\text { A }} & \text{ B } & \text{ C } & \text{ D } & \text{ E } & {\text { F }} & \text{ G } & \text{ H } \\\ \hline {}&{}&{}&{ \text{April } 25}&{}&{}&{\text{April } 24}&\text{Volume in}&\text{Volume in} \\ 1 & \text { Symbol } & {\text { Stock }} & \text { Last } & \text { Change } & \text { % Change } & \text { Close } & {1,000 \text{s}} & {100 \text{s}} \\ \hline 2 & \text { AAPL } & {\text { Apple Inc }} & {169.73} & { 0.79 } & {} & {168.94} & {35,445} & {} \\ \hline 3 & \text { BBW } & {\text { Build-A-Bear }} & {10.15} & {1.15} & {12.78} \text {%} & {} & {616} & {} \\ {} & {} & {\text { Workshop Inc }} & {} & {} & {} & {} & {} & {} \\ \hline 4 & \text { CTB } & {\text { Cooper Tire & }} & {14.7} & {?1.82} & {} & {16.52} & {2,671} & {} \\ {} & {} & {\text { Rubber Co }} & {} & {} & {} & {} & {} & {} \\ \hline 5 & \text { F } & {\text { Ford Motor Co }} & {7.5} & {?0.9} & {} & {} & {227,269} & {} \\ \hline 6 & \text { INTC } & {\text { Intel Corp }} & {22.56} & {} & {?0.57 \text {%}} & {} & {47,604} & {} \\\ \hline 7 & \text { MSFT } & {\text { Microsoft Corp }} & {29.83} & {} & {?6.19 \text {%}} & {31.80} & {145,194} & {} \\ \hline 8 & \text { NTGR } & {\text { NETGEAR Inc }} & {16.76} & {?3.37} & {?16.74 \text {%}} & {} & {8,085} & {} \\ \hline 9 & \text { YHOO } & {\text { Yahoo! Inc }} & {26.8} & {} & {?1.83 \text {%}} & {} & {50,523} & {} \\ \hline \end{array}$$ Write a formula to determine the close on April 24 for each of the following. Use the left side of the equation to indicate in which cell to store the formula. a. NETGEAR Inc \(\quad\) b. Ford Motor co

The Black Oyster Corporation is going out of business. All of the corporate assets are being sold. The money raised will be split by the stockholders. Which stockholders, the common or preferred, receive money first?

Monarch Financial Holdings, Inc. executed a 6 -for-s traditional split on October \(5 .\) Before the split there were approximately \(4,800,000\) shares outstanding, each at a share of \(\$ 18.00 .\) a. Use the method outlined in Examples 2 and 3 on pages 46 and 47 to determine the post-split share price and number of shares outstanding. b. Compare the results from part a. with that obtained by using Jon's method. Jon's method says that 6 -for- 5 is the same as 1.2 -for-1.

Jon noticed that most traditional splits are in the form \(x\) -for-1. He says that in those cases, all you need do is multiply the number of shares held by \(x\) and divide the price ber share by \(x\) to get the post-split numbers. Answer Exercises \(8-9\) based on Jon's method. Jon also noticed that every traditional split ratio can be written in the form \(x\) -for-1. Examine how the 3 -for- 2 traditional split can be expressed as 1.5 -for- \(1 .\) $$\frac{3}{2}=\frac{x}{1} \rightarrow 3=2 x \rightarrow x=1.5$$ Express each of the following traditional split ratios as \(x\) -for-l. a. 5-for-4 b. 6-for-5 c. 5-for-2 d. 8-for-5

A sole proprietorship is worth \(w\) dollars. The owner loses a lawsuit against him for \(y\) dollars where \(y\) is greater than \(w\) . Express algebraically the value of the personal property the owner must forfeit to pay the settlement.
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