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For Walter's formula P = (D + (E − D) × (r/Ke)) / Ke, if D = E (100% payout):
AP depends on r only
BP = D × r
CP = 0
DP = E/Ke
Answer & Solution
Correct answer: D. P = E/Ke
1. If D = E, then (E − D) = 0, and the second term vanishes.
2. P = D / Ke = E / Ke.
3. A 100%-payout share is priced as a perpetuity of dividends.
_Source: ICAI BoS CA Inter Paper 6A, Ch 8 "Dividend Decisions", §1 — Walter's Model_
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