Mala Prohibita Corporation has been earning 15% on equity and retaining 30% of its earnings after dividends and income tax at 30% tax rate. This situation is expected to continue. The company's ordinary shares are current selling at P165 per share. This year's dividend was paid at P15 per share. What is the cost of capital if Mala Prohibita will issue new shares of its ordinary shares? ution:
Mala Prohibita Corporation has been earning 15% on equity and retaining 30% of its earnings after dividends and income tax at 30% tax rate. This situation is expected to continue. The company's ordinary shares are current selling at P165 per share. This year's dividend was paid at P15 per share. What is the cost of capital if Mala Prohibita will issue new shares of its ordinary shares? ution:
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 4P
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![3. Mala Prohibita Corporation has been earning 15% on equity and retaining 30% of its earnings after
dividends and income tax at 30% tax rate. This situation is expected to continue. The company's ordinary
shares are current selling at P165 per share. This year's dividend was paid at P15 per share. What is the cost
of capital if Mala Prohibita will issue new shares of its ordinary shares?
Solution:
3](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F03153627-dcb6-42d3-b8d8-62f1b562b5ef%2F4af5485a-efcc-4c27-8950-20ef7d4a880d%2Fuikpdmu_processed.png&w=3840&q=75)
Transcribed Image Text:3. Mala Prohibita Corporation has been earning 15% on equity and retaining 30% of its earnings after
dividends and income tax at 30% tax rate. This situation is expected to continue. The company's ordinary
shares are current selling at P165 per share. This year's dividend was paid at P15 per share. What is the cost
of capital if Mala Prohibita will issue new shares of its ordinary shares?
Solution:
3
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