PFIN 2nd Edition by Lawrence Gitman ,Michael Joehnk,Randall Billingsley

Exercise 4

The Nanotechnology Research Company recently reported after-tax profits of $15.8 million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $1 million a year. The company's stock currently trades at $60 per share.
a. Compute the stock's earnings per share (EPS).
b. What is the stock's P/E ratio?
c. Determine what the stock's dividend yield would be if it paid $1.75 per share to common stockholders.