The following information is available in respect of a firm:Capitalization Rate : 10%Earnings per Share : Rs. 50Assume rate of return on investments :ja.12%b. 8%c.10%Show the effect of dividend policy on market price of shares applying Walter's formula when dividend pay-out ratio is :a. 0%b. 20%c. 40%d. 80%e. 100%

Here, Capitalization Rate (Ke) is 10% EPS is 50 Rate of Return on Investment (r) is : 12% 8% 10%…

The following information is available in respect of a firm: Capitalization Rate : 10% Earnings per Share : Rs. 50 Assume rate of return on investments: a. 12% b. 8% c. 10% Show the effect of dividend policy on market price of shares applying Walter's formula when dividend pay-out ratio is: a. 0% b. 20% c. 40% d. 80% e. 100%

The following information is available in respect of a firm: Capitalization Rate : 10% Earnings per Share : Rs. 50 Assume rate of return on investments: a. 12% b. 8% c. 10% Show the effect of dividend policy on market price of shares applying Walter's formula when dividend pay-out ratio is: a. 0% b. 20% c. 40% d. 80% e. 100%

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter10: Stockholder's Equity

Section: Chapter Questions

Problem 79E: Ratio Analysis MJO Inc. has the following stockholders equity section of the balance sheet: On the...

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Ratio Analysis MJO Inc. has the following stockholders equity section of the balance sheet: On the balance sheet date, MJOs stock was selling for S25 per share. Required: Assuming MJOs dividend yield is 1%, what are the dividends per common share? Assuming MJOs dividend yield is 1% and its dividend payout is 20%, what is MJOs net income?
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