Answer Happy

Question 4
Citi-food recently reported net profits after taxes of $17
million. It has 2.5 million shares of common stock outstanding. The
company’s stock currently trades at $60 per share.
a. Compute the stock’s earning per share (EPS) and
price-earnings (P/E) ratio. Show your workings.
b. Provided that beta for the stock market in general is 1.0 and
the beta for Citi-food is 0.8. What is the expected change in value
for the Citi-food stock if the stock market decreases in value by
10 percent?
c. Five years ago, Ben purchased 500 shares of Citi-food. At
that time, each share of Citi-food was selling for $55. He also
paid $100 commission when the shares were purchase. Now, five years
later, he has decided it’s time to sell his investment. Citi-food’s
share price when sold is current price of $60. In addition, he paid
a $100 commission to sell his shares. He also received total
dividends of $2 per share over the five-year investment period.
Calculate the total return and annualized holding yield for Ben’s
investment. Show your workings.