Presented Below Are Selected Data from the Financial Statements of Provost

question 104

Multiple Choice

Presented below are selected data from the financial statements of Provost Corp. $\begin{array} { lr r }& \underline { 2017 } & \underline { 2016 } \\\text {Net income }& \$ 110,000 & \$ 123,000 \\\text { Cash dividends paid on common stock}& \$ 42,000 & \$ 38,000 \\\text { Market price per share of common stock at the end of the year}& \$ 16.00 & \$ 13.00 \\\text {Shares of common stock outstanding }& 140,000 & 140,000 \end{array}$ The dividend payout ratio for 2017 is

• A) 1.8%
• B) 30.0%
• C) 36.3%
• D) 38.0%

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Definitions:

Prior Service Credit

A pension plan feature that grants employees credit for service periods before the commencement of the pension plan, affecting their benefits.

Defined Benefit Pension Plan

A retirement plan where the benefits that an employee will receive upon retirement are defined based on a formula considering factors such as salary history and duration of employment.

Service Cost

The portion of the pension expense that is recognized for the increase in pension benefits related to employee services of the current period.