You are the financial manager of a competitive investment company in South Africa. You have been presented with two possible investments: Pink Limited and Purple Limited as shown below. You have been supplied with the following information regarding the two companies. Pink LimitedPurple LimitedEarnings before interest and taxR3 000 000R4 000 000Long term interest bearing debtR500 000R800 000Earnings attributable to shareholdersR2 124 000R2 822 400Tax rate28%28%Share CapitalR2 00 000R5 000 000Number of ordinary shares issued200 000400 000Number of ordinary shares authorised1 000 000500 000Current market price of the shareR30R20.00Dividend per shareR5R3As a financial manager you are very concerned about the dividend yield and dividend payout ratio as these will be your indicators of the return on your investments.Q.3.2Calculate the dividend payout ratio for Pink Limited.

Name: You are the financial manager of a competitive investment company in S
Uploaded: 2022-11-22T13:58:24.000Z
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Description: You are the financial manager of a competitive investment company in South Africa. You have been presented with two possible investments: Pink Limited and Purple Limited as shown below. You have been supplied with the following information regarding

Formula to calculate Dividend payout ratio is given by: Dividend payout ratio = Dividend per share…

Answered: dividend payout ratio for Pink Limited

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter7: Types And Costs Of Financial Capital

Section: Chapter Questions

Problem 24DQ

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You are the financial manager of a competitive investment company in South Africa. You have been presented with two possible investments: Pink Limited and Purple Limited as shown below. You have been supplied with the following information regarding the two companies.

	Pink Limited	Purple Limited
Earnings before interest and tax	R3 000 000	R4 000 000
Long term interest bearing debt	R500 000	R800 000
Earnings attributable to shareholders	R2 124 000	R2 822 400
Tax rate	28%	28%
Share Capital	R2 00 000	R5 000 000
Number of ordinary shares issued	200 000	400 000
Number of ordinary shares authorised	1 000 000	500 000
Current market price of the share	R30	R20.00
Dividend per share	R5	R3

As a financial manager you are very concerned about the dividend yield and dividend payout ratio as these will be your indicators of the return on your investments.

Q.3.2

Calculate the dividend payout ratio for Pink Limited.

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