The capital structure of KPS Limited includes 5,00,000 equity shares of 10 each. The market price of equity share (cum-dividend) is 75 per share.…

CA Intermediate · Financial Management and Strategic Management · PYQS · September 2024
The capital structure of KPS Limited includes 5,00,000 equity shares of 10 each. The market price of equity share (cum-dividend) is 75 per share. The company has declared to pay dividend on equity shares @6 per share which will be paid within next three days. The company has a history of consistent growth in its dividends. It has been predicted that in the next year KPS Limited will pay dividend on its equity [email protected] per share. The rate of dividend growth will be maintained in foreseeable future. The cost of equity is calculated as:
(A) 36.5%
(B) 34.5%
(C) 37.5%
(D) 38.5%

Suggested Answer and Working Notes:

Correct Answer: Option (C)

37.5%

Topics: Part-A: Financial Management

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