Polycom Systems earned $540 million last year and paid out 30 percent of earning
ID: 2616577 • Letter: P
Question
Polycom Systems earned $540 million last year and paid out 30 percent of earnings in dividends.
By how much did the company’s retained earnings increase? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g., $1,234,000).)
With 100 million shares outstanding and a stock price of $130, what was the dividend yield? (Hint: First compute dividends per share.) (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Polycom Systems earned $540 million last year and paid out 30 percent of earnings in dividends.
Explanation / Answer
a) The income earned by the company is $540 million and dividend paid is 30% which is $162 million, hence the company's retained earnings increase by (540-162) = $378 million.
b) Dividend paid per share = 540/100 = $5.4 per share
Dividend yield = Annual Dividend/Current price = 5.4/130 = 4.15%