Win Some Ltd. is contemplating issue of shares for an expansion project: Market Capitalization Rate 15% Number of shares outstanding at the beginning of FY 1,00,000 Share price at the beginning of FY ₹ 120 Dividend expec

Calculation of share price at end of the FY: P o = (D 1 + P 1 ) / (1 + K e ) 120 = (2 + P 1 ) / (1 + 0.15) P 1 = ₹ 136/- Amount to be raised from new shares (₹) A Expected Net Income 50,00,000 B Total Dividend (₹ 1,00,000 x 2) (2,00,000) C Retained earnings (A - B) 48,00,000 D Investment required 1,00,00,000 E Amount to be raised from new shares (D-C) 52,00,000 (i) Total number of shares at the end of year ₹ A Amount to be raised from new shares 52,00,000 B Market price 136/- C New shares (A/B) [Rounded off to nearest whole number] 38,235 D Number of shares at beginning of the year 1,00,000 E Total shares at end of the FY (C+D) 1,38,235 (ii) Total market value at the end of the year: Total shares 1,38,235 Market price at end of year 136/- Market value at the end of the FY 1,87,99,960/-