X Ltd is currently having 100000 equity shares of the face value of Rs 10 each. It is expected that company will have netprofit of Rs 500000/. Due to recessionary condition, company expects 10% return on investment. The equitycapitalization is 12%. Find out the market price per share according to Gordon Model under different payout ratios of40%, 60% and 80%.

Current price of stock is the price which can be paid for purchase of the stock. It is also called…

Answered: X Ltd is currently having 100000 equity…

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

Problem 1PS

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Similar questions

Firm A distributed dividends to its shareholders for the current year according to the pa ratio of 35%. Net profit was 40 million TL. Total shares are 10 million. The dividends are expected to grow at a constant rate of %12 in the following years. Find the fundamental per share according to Gordon Model if the Turkey 10 year benchmark government bon vields at %14 and the risk premium is %6 If one share of firm A is selling at 20 TL in Ror
K SIROM Scientific Solutions has $10 million of outstanding equity and $5 million of bank debt. The bank debt costs 5% per year. The estimated equity beta is 2. If the market risk premium is 8% and the risk-free rate is 5%, compute the weighted average cost of capital if the firm's tax rate is 30%. OA. 15.17% OB. 17.44% O C. 15.93% OD. 16.68% ...
Abacus Company has 30% debt and 70% equity. The borrowing rate is 12%. (1) If you own 5% of the stock of Abacus, what is your dollar return if the overall capitalization rate, Ko, is 20%? (2) What is the implied required rate of return on equity if the total value of the firm is 1,500,000? Select one: a. None of the other three answers b. Dollar return=246000. c. Dollar return3D12300. d. Dollar return=54000.
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Compute the percentage change of Earnings Per Share Compute the Combined Leverage of the expected unit Compute the Operating Leverage of the expected units. Compute the Financial Leverage of the expected units. Compute the cOMBINED Leverage of the expected units.
9
XYZ. Ltd. current operating income is ₹20 lakhs. The firm has ₹20 lakhs of 20 percent debt outstanding. Determine the value of the firm using Net Income Approach if the cost of equity capital is estimated to be 24%. Calculate: value of equity and overall cost of capital.
Stevenson's Bakery is an all-equity firm that has projected perpetual EBIT of $183,000 per year. The cost of equity is 13.1 percent and the tax rate is 21 percent. The firm can borrow perpetual debt at 6.3 percent. Currently, the firm is considering converting to a debt–equity ratio of .93. What is the firm's levered value? MM assumptions hold. A. $829,786 B. $1,215,262 C. $1,155,579 D. $997,511 E. $921,985
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The cost of retained earnings for Tangshan Mining would be 17.60 percent if the firm just paid a dividend of $4.00, the stock price is $50.00, dividends are expected to grow at 8 percent indefinitely, and flotation costs are $5.00 per share. True False

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