Tata Elexi Ltd. has 80,000 shares outstanding. The current market price of these shares is Rs....

 

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Tata Elexi Ltd. has 80,000 shares outstanding. The current market price of these shares is Rs. 15 each. The company expect a net profit of Rs. 2,40,000 during the year and it belongs to the risk class for which the appropriate capitalization rate has been estimated to be 20%. The company is considering the dividend of Rs. 2 per share for the current year. (a) What will be the price of the share at the end of year when (i) when dividend is paid (ii) when dividend is not paid (b) How many new shares must the co. issue if the dividend is paid and the company needs Rs. 5,60,000 for an approved investment expenditure during the year? Use MM Model Calculations. Tata Elexi Ltd. has 80,000 shares outstanding. The current market price of these shares is Rs. 15 each. The company expect a net profit of Rs. 2,40,000 during the year and it belongs to the risk class for which the appropriate capitalization rate has been estimated to be 20%. The company is considering the dividend of Rs. 2 per share for the current year. (a) What will be the price of the share at the end of year when (i) when dividend is paid (ii) when dividend is not paid (b) How many new shares must the co. issue if the dividend is paid and the company needs Rs. 5,60,000 for an approved investment expenditure during the year? Use MM Model Calculations.