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8)Questions 6-10 are based on the following data. A firm has 4 crore shares outs
tanding, with a total market-value (market capitalization) of Rs.64 crores. The
firm was expected to pay a total of Rs.8 crore in dividends at the end of the ye
ar (t=1), growing at a rate of 12.50% per year. The company has just heard that
the share-price depends on dividends and, therefore, announces that it would mor
e than double the dividend-per-share at the end of the year and pay 2 times the
amount originally expected. To finance the additional dividends, the company pla
nned to issue new shares, simultaneously with dividend-payment at t=1. These new
shares would themselves receive dividends only from the end of their first year
(t=2).
Derive
is it?
0
1
2
3
4
5
the value at t=1 of the above dividend stream starting at t=2. How much
I do not want to answer this Question
16.00
20.00
24.00
25.00
None of the others
9)Questions 6-10 are based on the following data. A firm has 4 crore shares outs
tanding, with a total market-value (market capitalization) of Rs.64 crores. The
firm was expected to pay a total of Rs.8 crore in dividends at the end of the ye
ar (t=1), growing at a rate of 12.50% per year. The company has just heard that
the share-price depends on dividends and, therefore, announces that it would mor
e than double the dividend-per-share at the end of the year and pay 2 times the
amount originally expected. To finance the additional dividends, the company pla
nned to issue new shares, simultaneously with dividend-payment at t=1. These new
shares would themselves receive dividends only from the end of their first year
(t=2).
Using the answer to the above question, derive the cum-dividend-price of each ol
d share at t=1 under the new dividend policy. How much is it
10)Questions 6-10 are based on the following data. A firm has 4 crore shares out