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1963). James Walter, Dividend Policy: Its Influence on the Value of the Firm, Jo- 2 The present value of an infinite stream of D is: D +... =D/k (1+k) '(1+k) D + 3 The second component is derived as follows: The return from the first retained earnings, (E - D), would be: Time 0 1 2 3 4 (E-D)r (E-D) (E-Dr (Note that the retained earnings at time 1 earns return from time 2 onwards) The present value of this stream of returns is: (E-D)r (E-Dr (E-D)r + +... = (1+)2 (1+k)3 k (1+k) The return from the second retained earnings, (E-D), would be: Time 0 1 2 3 4 5 (E - Dr (E - D)r (E-D) r The present value of this stream of returns is: (E-D)r (E-D)r (E-D)r + (1+k) (1+k) k (1+k) + The finance department of Prashanth Textile Corporation gathered the following information: The carrying costs per unit of inventory are Rs.10. The fixed costs per order are Rs.20. The number of units required is 30,000 per year. The variable costs per unit ordered are Rs.2. The purchase cost price per unit is Rs.30. Determine the economic order quantity (EOQ), total number of orders in a year, and the time-gap between two orders