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Solving Problems Involving Stocks

This document provides examples of solving problems involving stocks. It discusses calculating dividend per share when given total dividends and number of shares outstanding. It also shows how to calculate the dividend an individual would receive based on their number of shares, the dividend rate, and the dividend per share. The final example calculates the dividend per common share for a company with a given total dividend, preferred dividend, and number of shares outstanding.

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john sallan
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241 views8 pages

Solving Problems Involving Stocks

This document provides examples of solving problems involving stocks. It discusses calculating dividend per share when given total dividends and number of shares outstanding. It also shows how to calculate the dividend an individual would receive based on their number of shares, the dividend rate, and the dividend per share. The final example calculates the dividend per common share for a company with a given total dividend, preferred dividend, and number of shares outstanding.

Uploaded by

john sallan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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SOLVING PROBLEMS

INVOLVING STOCKS
LEARNING OBJECTIVES
• To understand the concept of buying stocks.
• To solve problems involving stocks.
1. The ABC Company declared 3,800,000 dividend last
2018 and has a common stock outstanding shares of
500,000. What are the dividend per share of the
common stock?
Given: dividend = 3,800,000 # of shares =500,000
 

DPS(common) = P7.6
2. A corporation declares an annual dividend
of 5%. Aron owns 500 shares (par value Rs.
80). How much dividend will he receive?
Given: rate of dividend = 0.05 # of shares = 500 DPS(common) = 80

Formula
Dividend = rate of dividend x DPS (common) x no. of shares
Solution
Dividend = 0.05 x 80 x 500
Dividend = 2000
3. Robert bought shares of 6%, 100 shares at
$ 120. Adrian bought shares of 8%, 20 shares
at $ 30. Whose investment was better?
Formula
Dividend = rate of dividend x DPS (common) x no. of shares
Robert
Given: rate of dividend = 0.06 # of shares = 100 DPS(common) = 120
Dividend = 0.06 x 120 x 100
Dividend = $720
Adrian
Given: rate of dividend = 0.08 # of shares = 20 DPS(common) = 30
Dividend = 0.08 x 30 x 20
Dividend = $48

Robert’s investment is better than Adrian’s investment.


4. Let's calculate the dividends per share(common) for a given
company over a one-year period. Let's say that company has $2
million in total dividends over the course of the year plus
$200,000 as the preferred dividend and it has 10 million shares
outstanding.
Given: total dividend = 2,000,000 preferred dividend = 200,000 no. of shares = 10,000,000

Total common dividend = total dividend – total preferred dividend


Total common dividend = 2,000,000 – 200,000
Total common dividend = 1,800,000
 

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