the dawson corporation projects the following for the year 2005 630877

Items 1 and 2 are based on the following information:

The Dawson Corporation projects the following for the year 2005:

Earnings before interest and taxes	$35 million
Interest expense	5 million
Preferred stock dividends	4 million
Common stock dividend payout ratio	30%
Common shares outstanding	2 million
Effective corporate income tax rate	40%

The expected common stock dividend per share for Dawson Corporation for 2005 is

CMA adapted

1. $2.34
2. $2.70
3. $3.90
4. $2.10

If Dawson Corporation’s common stock is expected to trade at a price/earnings ratio of eight, the market price per share (to the nearest dollar) would be

1. $125
2. $ 56
3. $ 72
4. $ 68