quarterly earnings

Expert replies

success1111: Senior | Next Rank: 100 Posts; Posts: 87; Joined: Sun Apr 19, 2009 11:07 pm

by success1111 » Tue May 05, 2009 1:14 am

A certain company expects quarterly earnings of $0.80 per share of stock, half of which will be distributed as dividends to shareholders while the rest will be used for research and development. If earnings are greater than expected, shareholders will receive an additional $0.04 per share for each additional $0.10 of per share earnings. If quarterly earnings are $1.10 per share, what will be the dividend paid to a person who owns 200 shares of the company’s stock?

A. $92
B. $96
C. $104
D. $120
E. $240

Trust but verify.

Source: Beat The GMAT — Problem Solving | Tue May 05, 2009 1:14 am

Pranay: Senior | Next Rank: 100 Posts; Posts: 59; Joined: Tue May 05, 2009 1:58 am; Thanked: 1 times

Re: quarterly earnings

by Pranay » Tue May 05, 2009 2:14 am

success1111 wrote:A certain company expects quarterly earnings of $0.80 per share of stock, half of which will be distributed as dividends to shareholders while the rest will be used for research and development. If earnings are greater than expected, shareholders will receive an additional $0.04 per share for each additional $0.10 of per share earnings. If quarterly earnings are $1.10 per share, what will be the dividend paid to a person who owns 200 shares of the company’s stock?

A. $92
B. $96
C. $104
D. $120
E. $240

sacx: Master | Next Rank: 500 Posts; Posts: 139; Joined: Wed Oct 22, 2008 4:36 am; Thanked: 17 times

by sacx » Tue May 05, 2009 2:34 am

for every 80 cents earning per share , the shareholder receives half of it (40 cents)

For every 10 cents increase over 80 cents, shareholder receives additional 4 cents per share

now the earning per share was 110 cents (OR 80 +30 cents), so the shareholder would earn 40 + 3*4 = 52 cents per share

for 200 shares = 200*52 = 10400 cents or 104 dollars

SACX

success1111: Senior | Next Rank: 100 Posts; Posts: 87; Joined: Sun Apr 19, 2009 11:07 pm

by success1111 » Tue May 05, 2009 7:30 pm

sacx wrote:for every 80 cents earning per share , the shareholder receives half of it (40 cents)

For every 10 cents increase over 80 cents, shareholder receives additional 4 cents per share

now the earning per share was 110 cents (OR 80 +30 cents), so the shareholder would earn 40 + 3*4 = 52 cents per share

for 200 shares = 200*52 = 10400 cents or 104 dollars

Thanks.OA is 104

Trust but verify.

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