Question

The earning per share of a company are ` 10 and the rate of capitalization applicable to it is 10%. the company has before it the options of adopting a payout of 20% or 40% or 80%. using walter's formula, compute the market value of the company's share if the productivity of retained earnings is (a) 20%; (b) 10% and (c) 8%. what inference can be drawn from the above exercise?

Answer 1

The earning per share of a company are ` 10 and the rate of capitalization applicable to it is 10%. the company has before it the options of adopting a payout of 20% or 40% or 80%. using walter's formula, compute the market value of the company's share if the productivity of retained earnings is (a) 20%; (b) 10% and (c) 8%. what inference can be drawn from the above exercise?