1. You are given the following information in respect of XYZ Ltd.

Earning `1,00,000 Equity Capital 5,000 shares of `10 each Cost of capital 10%

Expected rate of return (i) 9%, (ii) 10% and (iii) 12%

Assuming that dividend payout ratios are 0%, 50% and 100% respectively, determine the effect of the different dividend policies on the share price of XYZ Ltd. for the above mentioned three alternative levels of rate of return using Gordon’s Model.