A company expects to generate the following net income and incur the following capex in the next five years:Rs. Lakhs Year 1 2 3 4 5 Net Profit 75 80 85 90 100 Capex 40 45 50 50 60 The total number of outstanding shares are 10,00,000 and the current dividend is Rs.4.50 per share.QUESTIONS : Determine the dividend if the firm follows a pure residual dividend policy Determine the external financing needed if the current dividend is maintained Determine the external financing required if the company maintains a 50% dividend pay-out ratio Under which of the above is the external requirement of funds maximized? Which method of dividend payment do you advocate for this firm?

A company expects to generate the following net income and incur the following capex in the next five years: Rs. Lakhs Year 1 2 3 4 5 Net Profit 75 80 85 90 100 Capex 40 45 50 50 60 The total number...

A company expects to generate the following net income and incur the following capex in the next five years:

Rs. Lakhs

The total number of outstanding shares are 10,00,000 and the current dividend is Rs.4.50 per share.

QUESTIONS :

Determine the dividend if the firm follows a pure residual dividend policy

Determine the external financing required if the company maintains a 50% dividend pay-out ratio

Jun 06, 2022