EPS is Rs 10. Capitalisation rate is 12.5%. IRR is 15%. Determine the pay-out ratio and the price of shares at this pay-out ratio based on Walter’s theory. If a share is selling for Rs 150. the...

EPS is Rs 10. Capitalisation rate is 12.5%. IRR is 15%. Determine the pay-out ratio and the price of shares at this pay-out ratio based on Walter’s theory.

If a share is selling for Rs 150. the company is to declare dividend for Rs 10 per share. The capitalisation rate is 10%. Find the shareholders’ wealth in case of dividend/no dividend.