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A company has K 1 2 0 , 0 0 0 ordinary shares in issue. It is expected that total profit after tax next year
A company has K ordinary shares in issue. It is expected that total profit after tax next year will be k The current company policy is zero dividends. Some directors have complained that this zero dividend policy affect the current share price of K The company has proposed to give of its retained earnings next year as dividends. The company has a rate of returns of
Required
A With supporting calculations, explain the effect that the proposal will have on the share price.
b describe the dividend theory that your calculations in a above supported and describe alternative theories related to dividends.
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