CapiCal Industries Declared a Quarterly Dividend of

question 2

Multiple Choice

CapiCal Industries declared a quarterly dividend of $.56 to its 250,000 common shares from quarterly earnings of $306,250. It has no preferred shares. Universal Hotels declared a quarterly dividend of $.35 to its one million shares on quarterly earnings of $1,225,000, net of preferred shares. Both companies are trading at a P/E ratio around 14. What is the dividend payout ratio for each company?

• A) Capical $0.20; Universal $0.46
• B) Capical $0.46; Universal $0.20
• C) Capical $1.83; Universal $0.82
• D) Capical $0.82; Universal $1.83
• E) Capical $0.82; Universal $0.11

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Definitions:

Public Utilities

Essential services provided by both government and private sectors including water, electricity, and transportation.

Efficiency Loss

The cost to society created by market inefficiency, often associated with the misallocation of resources or markets not reaching equilibrium.

Excise Tax

is a tax levied on the sale of specific goods or services, like fuel, tobacco, and alcohol, usually to discourage their use or generate revenue.

Payroll Taxes

Taxes imposed on employers and employees, based on the wages paid to employees, used to fund social security and other programs.