9. A company has outstanding two million shares. The current share price is 120 per share. The...
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9. A company has outstanding two million shares. The current share price is 120 per share. The company is contemplating an investment of 50 crore that has a net present value of 10 crore. The company has *50 crore internally generated cash that is available for distribution as dividend. The discount rate is 10 per cent. Show the consequences if (i) the company distributes 50 crore internal cash as dividend; (ii) the company uses 50 crore to finance the investment.
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