Like having regular income, some may be pensioners and rely on that money to live. The same can be illustrated with the help of the following formula: If no new/external financing exists, the value of the firm (V) will simply be the number of outstanding shares (n) times the prices of each share (P) by multiplying both sides of equation (1) we get: If, however, the firm sells (m) number of new shares at time 1 at a price of P1, the value of the firm (V) at time 0 will be: It has been explained some-where in this volume that the investment programme, at a given period of time, can be financed either from the proceeds of new issues or from the retained earnings or from both. If the company makes a loss, the shareholders will still be paid a dividend under the policy. . In other words, dividend distribution or non-distribution is of no importance to the investors or for the analysts to arrive at the value of the company. With this policy, shareholders receive a certain minimum amount of regular dividend on a scheduled basis, but the amount or rate is not fixed. When r

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