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MAT Exam 2024 Paper

Question Numbers: 109-112

DIRECTIONS (Qs. 109-112): Study the following graph & table given below and answer the question that follows.

Rate of interest, dividend payout ratio and the retained earnings of five companies.

Question : 111 of 150

Marks: +1, -0

Solution:

Concept:

Total profit is either retained or paid as dividend. So, profit

= \dfrac{\text{Retained earnings}}{1 - \text{Dividend payout ratio}}

Explanation:

For company Q, retained earnings

= ₹402

lakh and dividend payout ratio

= 19.60\%

Profit of Q

= \dfrac{402}{1 - 0.196} = \dfrac{402}{0.804} = 500

lakh.

For company P, retained earnings

= ₹155

lakh and dividend payout ratio

= 22.50\%

Profit of P

= \dfrac{155}{1 - 0.225} = \dfrac{155}{0.775} = 200

lakh.

Total profit of companies P and Q

= 200 + 500 = 700

lakh.

Answer:

Option C: ₹700 lakh.

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