Question

Kristy Nguyen is trying to decide between two different stock investments, and she asks for your...

Kristy Nguyen is trying to decide between two different stock investments, and she asks for your help. Information about each investment is below.

Company

Price per share

Annual Dividend

After-Tax Income

Projected Earn-

Number of Shares

This Year

ings Next Year

Outstanding

One Source

$24

$0.40

$35 million

$39 million

20 million shares

Manufacturing

Down South

$40

$0.56

$122 million

$90 million

140 million shares

Homes

a. Calculate the dividend yield for each company.

b. Calculate the earnings per share for each company.

c. Calculate the price-earnings (P/E) ratio for each company.

d. Based on this information, which company would you recommend?

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