he following information is collected from the current annual report of XYZ Ltd : Earning of firm Rs. 9, 00,000 Number of equity shares 1, 50,000 Return on Equity 22.5% Cost of equity 15% What should be the dividend payout ratio so as to keep the share price at Rs. 48 by using Walter Model? Also, determine the optimum dividend payout ratio and the market price of share at the optimum dividend payout ratio. What will the maximum and minimum share price under this model?
he following information is collected from the current annual report of XYZ Ltd : Earning of firm Rs. 9, 00,000 Number of equity shares 1, 50,000 Return on Equity 22.5% Cost of equity 15% What should be the dividend payout ratio so as to keep the share price at Rs. 48 by using Walter Model? Also, determine the optimum dividend payout ratio and the market price of share at the optimum dividend payout ratio. What will the maximum and minimum share price under this model?
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 1P
Related questions
Question
Practice Pack
The following information is collected from the current annual report of XYZ Ltd
:
Earning of firm Rs. 9, 00,000
Number of equity shares 1, 50,000
Return on Equity 22.5%
What should be the dividend payout ratio so as to keep the share price at Rs. 48 by
using Walter Model? Also, determine the optimum dividend payout ratio and the
market price of share at the optimum dividend payout ratio. What will the
maximum and minimum share price under this model?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Includes step-by-step video
Learn your way
Includes step-by-step video
Step by step
Solved in 2 steps
Recommended textbooks for you
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Finance
ISBN:
9781337514835
Author:
MOYER
Publisher:
CENGAGE LEARNING - CONSIGNMENT
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Intermediate Financial Management (MindTap Course…
Finance
ISBN:
9781337395083
Author:
Eugene F. Brigham, Phillip R. Daves
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning