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BRILLIANT’S Dividend Decision 249

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H$m°ñQ> Am°\$ H¡${nQ>c go H$_ h¡Ÿ& {S>ŠcmBqZJ \$åg© Ho$ Ho$g _| Ohm± 'r', 'K' go H$_ (r < K) hmoVm h¡ dhm± no-AmCQ> aoemo
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Ho$ {cE cm^Xm`H$ hmoJmŸ& Cnamoº$ {ddaU _| `h XoIm Om gH$Vm h¡ {H$ hmBEñQ> D/P aoemo 75% na Bg H$ånZr Ho$
eo`a H$s d¡ë`y ` 70 h¡ VWm CgHo$ níMmV² KQ>Vr Om ahr h¡Ÿ&
à{V eo`a H$s _mH}$Q> d¡ë`y _¡pŠO__ hmoJr O~ H$ånZr AnZr A{Zª½g H$mo gwa{jV aIo {~Zm 100% {S>{dS>oÝS>
Kmo{fV H$ao§Ÿ& AV:, Am°pßQ>__ noAmCQ> aoemo 100% hmoJmŸ&
Z {c.: Bg H$ånZr H$mo EH$ ''Zm°_©c \$_©'' _mZm Om gH$Vm h¡Ÿ& `hm± 'r', 'K' Ho$ ~am~a h¡ AWm©V² XmoZm| Ho$gg _|
10% h¡Ÿ& `Ú{n, D/P aoem| H$m H$ånZr Ho$ eo`g© H$s d¡ë`y na H$moB© à^md Zht n‹S>oJmŸ& Zm°_©c \$_© Ho$ Ho$g _| Ohm± r =
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H$m 100% {S>{dS>oÝS> Ho$ ê$n _| Kmo{fV H$a gH$Vr h¡ `m gånyU© A{Zª½g H$mo gwa{jV aI gH$Vr h¡Ÿ& AV:, Cnamoº$
{ddaU _| `h XoIm Om gH$Vm h¡ {H$ VrZm| pñW{V`m| _| cJmVma eo`a H$s d¡ë`y ` 80 h¡Ÿ& Zm°_©c \$åg© Ho$ Ho$g _|
{S>{dS>oÝS> nm°{cgr à{V eo`a H$s _mH}$Q> d¡ë`y H$mo à^m{dV Zht H$aVr h¡Ÿ&

Criticism of Walter's Model dmëQ>a _m°S>c H$s AmcmoMZmE±
The Walter's model, one of the earliest dmëQ>g© _m°S>c, [aQ>Z© H$s Xa H$s {d{^Þ _mÝ`VmAm|
theoretical models, explains the relationship Ho$ A§VJ©V \$_© H$s d¡ë`y Am¡a {S>{dS>oÝS> nm°{cgr Ho$ _Ü`
between dividend policy and value of the firm g§~§Ym| H$s ì`m»`m H$aZo dmcm EH$ àmapå^H$ Ï`mo[a{Q>H$c
under different assumptions about the rate of
return. Some of the assumptions are criticised _m°S>c h¡Ÿ& BgH$s _mÝ`VmAm| H$s {ZåZ{c{IV AmcmoMZm
as follows: H$s JB©:
(i) No External Financing: The model (i) H$moB© EŠgQ>aZc \$m`ZopÝg¨J Zht: _m°S>c `h _mZVm
assumes that the investment opportunities of h¡ {H$ \$_© H$s BZdoñQ>_oÝQ> Am°ßÀ`y©{ZQ>rO H$mo Ho$dc [aQ>oÝS>
the firm are financed by retained earnings only A{Zª½g Ûmam hr \$m`ZoÝñS> {H$`m Om gH$Vm h¡ Bg CÔoí` Ho$
and no external financing i.e. debt or equity is {cE EŠgQ>Z©c \$m`ZopÝg¨J AWm©V² S>oãQ> `m B{ŠdQ>r H$m Cn`moJ
not used for the purpose. When such a situation
exists, the firm's dividend policy will not be Zht {H$`m OmVmŸ& O~ Bg n«H$ma H$s pñW{V {dÚ_mZ hmoJr V~
optimum. \$_© H$s {S>{dS>oÝS> nm°{cgr Am°pßQ>__ Zht hmoJrŸ&
(ii) Constant Rate of Return (r): Walter's (ii) [aQ>Z© H$s pñWa Xa (r): dmëQ>g© _m°S>c Bg
model is based on the assumption that r is _mÝ`Vm na AmYm[aV hmoVm h¡ {H$ r pñWa h¡Ÿ& dmñVd _|,
constant. Infact, r decreases as more investment A{YH$ BZdoñQ>_oÝQ> H$aZo na r H$_ hmoVm OmVm h¡Ÿ& A{YH$
occurs. The most profitable investments are àm°{\$Q>o~c BZdoñQ>_oÝQ²>g nhco {H$E OmVo h¢ VWm {\$a H$_
made first and then less profitable investments
are made. The firm should stop at a point where àm°{\$Q> dmco BZdoñQ>_oÝQ> {H$E OmVo h¢Ÿ& \$_© H$mo EH$ {~ÝXw
r = K. na ê$H$ OmZm Mm{hE Ohm± r = K hmoŸ&
(iii) Constant Opportunity Cost of Capital (iii) H¡${nQ>c H$s pñWa Am°ßÀ`y©{Z{Q>O H$m°ñQ> (K):
(K): A firm's cost of capital or discount rate K EH$ \$_© H$s H$m°ñQ> Am°\$ H¡${nQ>c `m {S>ñH$mCÝQ> aoQ> K
does not remain constant. It changes directly h_oem pñWa Zht ah gH$VrŸ& `h \$_© H$s [añH$ Ho$ gmW