AFM Problems - Dividend Policy

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Dividend policy

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A firm has given the following information and requested you to determine the share priceEarnings per share Rs.10Retention ratio - 40%Capitalization rate 15%Returns on Investment 14%

Good Luck earning Rs 2,00,000 and outstanding equity share are 10,000. The companys cost of capital is 15% rate of return on investment is 20%. Determine price of equity share assuming 60% dividend payout.

Calculate the market price of a share of ABC ltd under 1. Walter formula 2. Dividend growth modelEarnings per share Rs 5, Dividend per share rs 3, cost of capital 16%, Internal rate of return on investment 20%, retention ratio 50%.