a) You are given the following information Jamuna Ltd Market price per share Tk. 400 Earnings per share Tk. 25 Dividend per share Tk. 10 P/E ratio 8 times Required (Using Walter’s model) i) Cost of equity, ii) D/P ratio, iii) Retention ratio, iv) Internal rate of return,v)Growth rate b) Explain the reasons why do investors prefer high or low pay out ratio? c) Why do you think Dividend Irrelevance theory is unrealistic?
a) You are given the following information Jamuna Ltd Market price per share Tk. 400 Earnings per share Tk. 25 Dividend per share Tk. 10 P/E ratio 8 times Required (Using Walter’s model) i) Cost of equity, ii) D/P ratio, iii) Retention ratio, iv) Internal rate of return,v)Growth rate b) Explain the reasons why do investors prefer high or low pay out ratio? c) Why do you think Dividend Irrelevance theory is unrealistic?
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter3: Analysis Of Financial Statements
Section: Chapter Questions
Problem 6MC: Calculate the projected price/earnings ratio and market/book ratio. Do these ratios indicate that...
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- a) You are given the following information Jamuna Ltd
Market price per share |
Tk. 400 |
Earnings per share |
Tk. 25 |
Dividend per share |
Tk. 10 |
P/E ratio |
8 times |
Required (Using Walter’s model) i)
- b) Explain the reasons why do investors prefer high or low pay out ratio?
c) Why do you think Dividend Irrelevance theory is unrealistic?
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