Symphony Limited is an all equity financed company. It has 10 million shares outstanding and is expected to earn net cash profits of Rs80 million. Shareholders of the company has an opportunity cost of capital of 20%.What will be the share price if investments made by the company earn 24% and it retains 40% of profits? Will share price change if retention is 60%? Give reasons why share price may not be the same
Symphony Limited is an all equity financed company. It has 10 million shares outstanding and is expected to earn net cash profits of Rs80 million. Shareholders of the company has an opportunity cost of capital of 20%.What will be the share price if investments made by the company earn 24% and it retains 40% of profits? Will share price change if retention is 60%? Give reasons why share price may not be the same
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Symphony Limited is an all equity financed company. It has 10 million shares outstanding and is expected to earn net cash profits of Rs80 million. Shareholders of the company has an
Give reasons why share price may not be the same
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