The earnings per share of a company is Rs 8 and the rate of capitalisation applicable...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The earnings per share of a company is Rs 8 and the rate of capitalisation applicable is 10 per cent. The company has before it, an option of adopting (i) 50, (ii) 75 and (iii) 100 per cent dividend pay out ratio. Compute the market price of the company's quoted shares as per Walter's Model if it can earn a return of (a) 15, (b) 10 and (c) 5 per cent on its retained earnings. The earnings per share of a company is Rs 8 and the rate of capitalisation applicable is 10 per cent. The company has before it, an option of adopting (i) 50, (ii) 75 and (iii) 100 per cent dividend pay out ratio. Compute the market price of the company's quoted shares as per Walter's Model if it can earn a return of (a) 15, (b) 10 and (c) 5 per cent on its retained earnings.
Expert Answer:
Related Book For
Financial Accounting and Reporting
ISBN: 978-0273744443
14th Edition
Authors: Barry Elliott, Jamie Elliott
Posted Date:
Students also viewed these accounting questions
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
The capital structure of Chavboro, a quoted company, during the years ended 31 October 2005 and 2006 was as follows: $ 6,000,000 ordinary shares of 50 cents ... 3,000,000 10% preferred shares of $1...
-
The Jordan Corporation is a manufacturer of heavy-duty trucks. Because of a low internal profitability rate and lack of favorable investment opportunities in the existing line of business, Jordan is...
-
Find the laurents series f(z)= 1/(z-1)(z-2) (i) |z| <1 (ii) 1 2
-
Reddy owns common stock with a market value of $30,000. The stock pays a cash dividend of $1,200 per year (a 4% annual yield). Reddy is considering selling the stock, which she purchased 13 years ago...
-
Journalize the following investment transactions of Russell Corp.: 2017 Nov. 6 Purchased 1,200 common shares of Aveda Corporation at $78.00 per share, with brokerage commission of $500. The shares...
-
Accumulated other comprehensive income (AOCI) appears as a subsection of shareholders equity on the balance sheet. Discuss the components of AOCI. What information does the AOCI convey to financial...
-
Why have so many firms rushed to implement ERP systems over the past ten years?
-
Shares of stock in the Norgard Teaching Company ( NTC ) are currenting trading at $ 4 2 . 7 6 per share. NTC was very profitable this year and because of this they paid a dividend in all 4 quarters....
-
Lewis Company reports the following fixed budget and actual results for May. Prepare a flexible budget performance report showing variances between budgeted and actual results. (Indicate the effect...
-
At the end of the period, a company had dividends of $5,000. To close this account, which of the following statements is true? O Dividends is debited for $5,000. O Retained Earnings is credited for...
-
3+x-5-x i) Prove that lim x-1 dy j) Find if x = at, y = 2at. dr
-
Should future Administrators seek FIO leadership with other backgroundsperhaps as insurance regulators in other countriesor is experience with insurance regulation at the state-level essential?
-
You observe the following preferred stock (a perpetuity) in the market: You can pay $1,000,000 today for the right to receive $70,000 annually starting in a year. What is the implied discount rate...
-
RC4 is a stream cipher standard that was used widely on the Internet. Read the below pseudocode for its initialization phase and cipher bitstream generation phase: // Initialization byte key [N];...
-
a) Evaluate Sin75 b) Find the general solution of tanx=- 3
-
Help me solve Unit 2 - Small Business 3 USE ATTACHED GRAPH. BE SURE TO LABEL THE GRAPH. (GRAPH #2) Now that you have completed your assessment, you settle on a production scheme. You have an idea of...
-
Burberrys competitive advantage is through its differentiation strategy. What risk should Burberry remain aware of?
-
(a) Assume that on 1 January 20X7 Parent Ltd acquired all the ordinary shares in Daughter Ltd for £10,800 cash. The fair value of the net assets in Daughter Ltd was their book value. (b) The...
-
The following five-year summary relates to Wandafood Products plc and is based on financial statements prepared under the historical cost convention: Liquidity ratios Per share Net operating assets...
-
Alpha has owned 75% of the equity shares of Beta since the incorporation of Beta. Therefore, Alpha has prepared consolidated financial statements for some years. On 1 July 20X6 Alpha purchased 40% of...
-
The 2014 financial statements of LVMH Moet Hennessey-Louis Vuitton S.A. are presented in Appendix C of this book. LVMH is a Paris-based holding company and one of the worlds largest and best-known...
-
What is the purpose of the materials requisition?
-
What is the formula for calculating the factory overhead applied rate?
The Mathematics Of Encryption: An Elementary Introduction 1st Edition - ISBN: 0821883216 - Free Book
Study smarter with the SolutionInn App