Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Aaron Inc. has 3 0 1 million shares outstanding. It expects earnings at the end of the year to be $ 6 3 8 million.

Aaron Inc. has 301 million shares outstanding. It expects earnings at the end of the year to be $638 million. The firm's equity cost of capital is 12%. Aaron pays out 50% of its earnings in total: 30% paid out as dividends and 20% used to repurchase shares. If Aaron's earnings are expected to grow at a constant 6% per year, what is Aaron's share price?
A. $35.32
B. $8.83
C. $26.49
D. $17.66
image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Bitcoin Mining The New Gold Rush Bitcoin Mining Is The Future

Authors: Sam Sutton

1st Edition

1985654717, 978-1985654716

More Books

Students also viewed these Finance questions

Question

Use target pricing?

Answered: 1 week ago

Question

LO34.2 List and describe the components of the U.S. money supply.

Answered: 1 week ago