Answer to Question #335018 in Management for Antoevon

Question

The following information is available in respect of the Return of Equity (ROE), Cost of capital (ke) and Earning Per Share EPS of XYZ ltd.

1. Return of Equity (ROE)

I) 15% II) 10% III) 8%

2. Cost of capital (ke) = 10%

3. Earnings Per Share (EPS) = Rs. 10.00

4. Retaining policy of its earning

a) 0%

b) 20%

c) 30%

d) 50%

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e) 65%

Determine the value of share based on the above different policy of retaining and different ROE.

Explain the relationship between ROE and share value.