Saraswati Glass Works has an investment of Rs 30 crore divided into 30 lakh ordinary shares. The profitability rate of the firm is 20 percent and the capitalization rate is 12.5 percent. What is the optimum dividend payout for the firm is Walters model is used? What shall be the price of the share at optimum payout? Would your answer change if the profitability rate is assumed to be 15 percent? What would happen if profitability rate is 10 per cent? Show computations.

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To calculate the optimum dividend payout for Saraswati Glass Works using the Walters model we first ... View the full answer