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Show that the payment of dividends does not affect money

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Question - Samco ltd has a cost of equity of 10%. Currently it has 250,000 ordinary shares which are traded at the stock exchange of at sh 120 per share. The company's earnings per share is sh 10 and it intends to maintain a dividend payout ratio of 50% of the end of the current financial year. The expected net income for the year is sh. 3 million and the available investment proposals are estimated to cast shs 6 million.

Required - Using MM dividend model show that the payment of dividends does not affect the value of money.

Reference no: EM132596736

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