Rosa Ltd. has outstanding 1,20,000 shares selling at ? 20 per share. The company hopes to make a net income of ? 3,50,000 during the year. Company is thinking of paying a dividend of ? 2 per share at the end of current year. Capitalization rate has been estimated to be 15%. On the basis of MM model how many new shares the company must issue if the dividend is paid and company needs ?9,50,000 for an approved investment expenditure?
(A) 40,000 equity shares
(B) 50,000 equity shares
(C) 60,000 equity shares
(D) 70,000 equity shares

Answer rating: 100% (QA)

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