dividend decisions

Both are same Numerator D 0 x ( 1+ g) = Next year dividend ; E x ( 1-b) = Earnings x payout ratio next year Denominator g = br i.e growth rate = return rate on capital x retention rate

Sriram Somayajula

Admin

16-Oct-20 10:10

but when apply the same for rtp nov20 question , I am not getting the same answer

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Swathi Krishna

CA Final

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16-Oct-20 21:41

Which Question

Sriram Somayajula

Admin

16-Oct-20 22:13

8th question

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Swathi Krishna

CA Final

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19-Oct-20 16:14

Can you share what you have done?

CA Suraj Lakhotia

Admin

20-Oct-20 17:16

Ohoo I swa this now Here's what I have done

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Swathi Krishna

CA Final

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07-Nov-20 12:36

This walter forumula - there is no growth rate in it. please refer page 9.18 of ICAI Study material Dividend decisions chapter

Sriram Somayajula

Admin

07-Nov-20 12:44

Sir, I was talking about Gordon's formula

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Swathi Krishna

CA Final

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07-Nov-20 14:22

My suggestion always apply d0 x ( 1+g) and state an assumption that the given dividend is dividend for year ( unless they specifically state in the question that the given dividend is for next year) and you are computing price based on next year's dividend. What you have done is correct

Sriram Somayajula

Admin

07-Nov-20 20:56

K sir Thank you so much for efforts

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Swathi Krishna

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08-Nov-20 01:12