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Sir can you please explain why am i not getting the same answer for Jun08 thp co tax saving anounced when i just do .096/.12 to get PV to add to the answer without announcement
Because they maintain a payout ratio of 50%, so the dividend will only increase by 96,000/2 = 48,000.
Also, because of the fact that only part is paid as dividend, there will be growth (as in part (a) ) of the question.
Therefore the PV of the tax saving = (48,000 x 1.05) / (0.12 – 0.05) = $720,000
Okay i’m sorry, that’s very very negligent of me.. Thank you so much Sir!!!
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