7. XYZ Ltd. has 1,00,000 outstanding shares of `10 each. The company earns a rate of 24%...

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● 7. XYZ Ltd. has 1,00,000 outstanding shares of `10 each. The company earns a rate of 24% on its investments and retains 50% of earnings as a policy. If Cost of Capital is 18%, calculate price of the share according to Gordon’s Model. The company has total investment of around `10,00,000 in assets. If payout ratio changes to 10%, 90% how will share price change? Also comment on the optimal dividend policy for XYZ Ltd. as per Gordon’s Model.

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