You have found the following stock quote for RJW Enterprises

You have found the following stock quote for RJW Enterprises, Inc., in the financial pages of today’s newspaper.

What was the closing price for this stock that appeared in yesterday’s paper? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

If the company currently has 35 million shares of stock outstanding, what was net income for the most recent four quarters? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Net income??? **not 298,550,000 or 299,600,000**

Solution

Answer:

The annual dividend paid to stockholders is $3.20, and the dividend yield is 2.5 percent.

Using the equation for the dividend yield:

Dividend yield = Dividend / Stock price

We can plug the numbers in and solve for the stock price:

.025 = $3.20 / P0

P0 = $3.20/.025 = $128

The \"Net Chg\" of the stock shows the stock decreased by $0.47 on this day, so the closing stock price yesterday was:

Yesterday\'s closing price = $128+ 0.47 = $128.47

Answer: To find the net income, we need to find the EPS. The stock quote tells us the P/E ratio for the stock is 15.

Since we know the stock price as well, we can use the P/E ratio to solve for EPS as follows:

P/E = 15 = Stock price / EPS = $128 / EPS

EPS = $128 / 15 = $8.53333

We know that EPS is just the total net income divided by the number of shares outstanding, so:

EPS = NI / Shares

= $8.5333 = NI / 35,000,000

NI = $8.5333(35,000,000) = $298665500