Hanky Ltd. and Shanky Ltd. operate in the same field, manufacturing newly born babies’s clothes. Although Shanky Ltd. also has interests in…
Dividends have just been paid and the retained earnings have already been reinvested in new projects. Hanky Ltd. plans to adopt a policy of retaining 35% of earnings after the takeover and expects to achieve a 17% return on new investment. Saving due to economies of scale are expected to be 85,00,000 per annum. Required return to equity shareholders will fall to 20% due to […]
