Question

Q2. SOLVE ALL 3 PARTS
A) Calculate ROE when debt equity ratio is 0.9, cost of debt is 12% and ROI is
25%. Tax is payable @45%.
B) Write down the formula for following ratios:
i) Interest Coverage Ratio
ii) Fixed Charge Coverage Ratio
lii) Debtors Turnover Ratio
iv) Return on Equity
v) Yeild Ratio
C) The data of Paras Itd is as follows:
EPS =Rs 7, the rate of return on investment is 17% and the cost of equity is
15%. You are required to find out the price of equity share of Paras Ltd when
the Dividend Payout ratio is 40%, 50% and 60%.​

Answer 1

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