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Q. Example on Walters dividend model?
Example: - The following information is obtainable in respect of a firm:
Capitalisation Rate (Ke) = 10%
Earning Per Share (E) = Rs. 8
Compute the market price of share under Walter's Model by assuming Rate of Return
(i) 15% (ii) 10% (iii) 5% and
Dividend Payout Ratio
(i) 0% (ii) 25% (iii) 50% (iv) 75% (v) 100%
Solution:-
DIVIDEND POLICY AND THE VALUE OF SHARE ( WALTER'S MODEL)
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