Dividend decisions

Substitute known numbers of D1, g, P0 in formula p0 = D1/(Ke-g) - you will get Ke

Sriram Somayajula

Admin

29-Sep-21 07:47

Thank you sir and I have one more doubt in sub division (ii) r=10 % is it correct?

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Miradevi S

CA Final

★ 14K+

29-Sep-21 08:08

Sir in sub division (ii) I find out g but how to find new dividend D1

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Miradevi S

CA Final

★ 14K+

29-Sep-21 08:12

D1 is 20

vishwam mandepudi

Qualified CA

★ 2K+

29-Sep-21 10:35

But in the ans it is different

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Miradevi S

CA Final

★ 14K+

29-Sep-21 13:59

See this it is different D1 =20 is for subdivision( i) but For sub division( ii)

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Miradevi S

CA Final

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29-Sep-21 14:02

How to find D1 for sub division (ii)

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Miradevi S

CA Final

★ 14K+

30-Sep-21 07:34

In (ii) growth rate is changed. So expected dividend ( D1) for the next year also changes. Assuming retention ratio is same for (i) and (ii), retention ratio is calculated by using g= br. Dividend pay out ratio = 1-b. Dividend (D1) is calculated by using D = EPS* Dividend pay out ratio formula.

vishwam mandepudi

Qualified CA

★ 2K+

30-Sep-21 10:47

Thank you sir

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Miradevi S

CA Final

★ 14K+

30-Sep-21 14:28