24/02/2020 Assignment Print View

Problem 2-10

Refer to Figure 2.8 and look at the listing for General Electric.

a. How many shares could you buy for $12,000? (Round down your answer to the nearest whole
number.)

Number of shares 401+/-1%

b. What would be your annual dividend income from those shares? (Round your answer to 2
decimal places.)

Annual dividend income $ 368.92+/-0.1%

c. What must be General Electric's earnings per share? (Round your answer to 2 decimal places.)

Earnings per share $ 0.97+/-1%

d. What was the firm's closing price on the day before the listing? (Round your answer to 2 decimal
places.)

Yesterday's closing price $ 30.12

rev: 08_03_2017_QC_CS-94975, 08_22_2017_QC_CS-96105, 09_09_2017_QC_ CS-98125

 
Explanation:

a.
You could buy: $12,000/$29.87 = 401.74 shares.

b.
Your annual dividend income would be: 401 × $.92 = $368.92

c.
https://ezto.mheducation.com/hm.tpx?todo=c15SinglePrintView&singleQuestionNo=1.&postSubmissionView=13252712569321909&wid=1325271327… 3/4
24/02/2020 Assignment Print View

The price-to-earnings ratio is 30.68 and the price is $29.87.

Therefore: $29.87/Earnings per share = 30.68⇒ Earnings per share = $.97

d.
General Electric closed today at $29.87, which was $-0.25 lower than yesterday’s price of $30.12.

https://ezto.mheducation.com/hm.tpx?todo=c15SinglePrintView&singleQuestionNo=1.&postSubmissionView=13252712569321909&wid=1325271327… 4/4