A company earns Rs.5 per share it is capitalized at a rate of 10% and has a rate of return on investments of 16%

A company earns Rs.5 per share

A company earns Rs.5 per share ;it is capitalized at a rate of 10% and has a rate of return on investments of 16%. According to Walter’s model what should be the price per share at 50% dividend payout ratio? Is this the optimum payout ratio according to Walter?

1.”The modern approach is an improvement over the traditional approach of financial management.”Do you agree?
2. A company has Rs.200000 as EBIT .It has Rs.1000000,10% debentures .The equity capitalization rate (Ke)of the company is 12.5%.Find out the value of the firm under Net Income Approach. Also prove the NI approach.

 

 

A company earns Rs.5 per share

 

 

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A company earns Rs.5 per share