Incorrect as annual interests costs are taken into account for the net profit calculation. The company’s retained earnings for Year 8 would be $5 million (net income of $35 million less dividend payments of $15 million less $15 million in interest payments) and its Year 8 EPS would be $0.50. Incorrect as retained earnings is after the share and the interest costs are paid out. The company’s retained earnings for Year 8 would be $35 million.
If a company earns net income of $35 million in Year 8, has 10 million shares of stock, pays a dividend of $1.50 per share, and has annual interest costs of $15 million, then Glo-Bus Quiz 2 is an exceptionally challenging quiz unless you have a firm grasp of all of the formulas and how they interact in the game itself.
