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Finance (stock) questions: Pills Berry Company, Ms. Queen (and her marginal tax bracket), and Plunkett Gym Equipment, Inc.

9.) The stock of Pills Berry Company is currently selling at $60 per share. The firm pays a dividend of $1.80 per share.
a.) What is the annual dividend yield?
b.) If the firm has a payout rate of 50 percent, what is the firm's P/E ratio?

11.) Ms. Queen is in a 35 percent marginal tax bracket. If Ms. Queen receives $3.80 in cash dividends, how much in taxes (per share) will she pay? (Recall the new 15 percent rule.)

3.) Plunkett Gym Equipment, Inc., has a $1,000 par value convertible bond outstanding that can be converted into 25 shares of common stock. The common stock is currently selling for $34.75 a share, and the convertible bond is selling for $960.
a. What is the conversion value of the bond?
b. What is the conversion premium?
c. What is the conversion price?
(Assume all bonds in the following problems have a par value of $1,000.)

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Solution Preview

9)a. Annual dividend yield = cash dividend/price

= $1.80/$60 = 3.00%

b. Earnings per share = cash dividends/payout rate


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