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The net income increased by 15% compared to the last year, and this year 4 points the firm's EPS is Rs 2
The net income increased by 15% compared to the last year, and this year 4 points the firm's EPS is Rs 2. If the net income in the last year was Rs 15,000, and the retained earnings in this year increased by Rs 3000, the rupee dividend per share for the current year is: O 1.65 O None 1.68 O 0.35 O 1.63 1.58
4 points The net income increased by 7% compared to the last year, and this year the firm's EPS is Rs 2. If the net income in the last year was Rs 15,000, and the retained earnings in this year increased by Rs 3000, the dividend payout ratio for the current year is: * O 0.83 0.81 O 0.20 O None O 0.17
Expert Solution
Q-1) Net Income this year increased by 15% compared to last year
Last Year's Net Income = $15,000
Current year's Net Income = $15000*(1+15%) = $17,250
EPS this year = $2
No of shares oustanding this year = Current year's Net Income/EPS = $17,250/$2
No of shares oustanding this year = 8625
- Additions to retained Earnings this year = $3000
Dividend per share = ( Current year's Net Income - Additions to retained Earnings this year)/No of shares oustanding this year
Dividend per share = ($17,250 - $3000)/8625
Dividend per share = $1.65
Option 1
Q-2)
Net Income this year increased by 7% compared to last year
Last Year's Net Income = $15,000
Current year's Net Income = $15000*(1+7%) = $16,050
EPS this year = $2
No of shares oustanding this year = Current year's Net Income/EPS = $16,050/$2
No of shares oustanding this year = 8025
- Additions to retained Earnings this year = $3000
Dividend per share = ( Current year's Net Income - Additions to retained Earnings this year)/No of shares oustanding this year
Dividend per share = ($16,050 - $3000)/8025
Dividend per share = $1.6262
- Current Year's Dividend Payout ratio = Dividend per share/EPS
= $1.6262/$2
Current Year's Dividend Payout ratio = 0.81
Option 2
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