Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Dividend payout ratio under Walter model Thankyou 7. The following figures have been collected from the annual report of ABC Ltd. for the current financial
Dividend payout ratio under Walter model Thankyou
7. The following figures have been collected from the annual report of ABC Ltd. for the current financial year: Net Profit 375 lakhs Outstanding 12% preference shares 250 lakhs No. of equity shares 7.50 lakhs Return on Investment 20% Cost of capital i.e. (K) 16% (a) COMPUTE the approximate dividend pay-out ratio so as to keep the share price at 42 by using Walter's model? (b) DETERMINE the optimum dividend pay-out ratio and the price of the share at such pay-out. (c) PROVE that the dividend pay-out ratio as determined above In (b) is optimum by using random pay-out ratioStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started