If the earnings per share is Rs 4, dividend pay-out ratio is 40 percent, cost of equity capital is 20 percent and growth rate in the rate of return on investment is 15 percent, then the value of the stock according to the Gordon’s dividend capitalization model is
If the earnings per share is Rs 4, dividend pay-out ratio is 40 percent, cost of equity capital is 20 percent and growth rate in the rate of return on investment is 15 percent, then the value of the stock according to the Gordon’s dividend capitalization model is
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 7P
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Question
If the earnings per share is Rs 4, dividend pay-out ratio is 40 percent,
a.
Rs 16
b.
Rs 24
c.
Rs 32
d.
Rs 40
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