Question

If the face value of both share is same, then which investment out of the following is more profitable?
CompanyA:dividend=16%
MV=Rs.80
CompanyB=dividend=20%,
MV=Rs.120

Answer 1

Answer:

A

Step-by-step explanation:

Let FV = Rs x

A                                                              B

Return %= FV*D% / MV                       Return% = x*20/ 120

= x*16/ 80                                                               = x/6

=x/5

Since x/5 > x/6

A is more profitable