7. Halliford Corporation expects to have earnings this coming year of $2.66 per share. Halliford plans to retain all of its earnings for the next two years. For the subsequent two years, the firm will retain 55% of its earnings. It will then retain 23% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 27.87% per year. (Investments from prior years will continue generate the same earnings.) Any earnings that are not retained will be paid out as dividends. Assume Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If Halliford's equity cost of capital is 9.1%, what price would you estimate for Halliford stock? 1 2 3 4 5 6 Earnings Return on Reinvestment 27.87% 27.87% 27.87% 27.87% 27.87% EPS Growth EPS $ 2.66 Dividends Retention Ratio 100% 100% 55% 55% 23% 23% Dividend Payout Ratio Dividends