Question
AFW Industries has 200 million shares outstanding and expects earning at the end of this year of$700 million. AFW plans to pay out 60% of
AFW Industries has 200 million shares outstanding and expects earning at the end of this year of$700 million. AFW plans to pay out 60% of its earning in total, paying 40% as a dividend and using
20% to repurchase shares. If AFWs earnings are expected to grow by 8% per year and these payout
rates remain constant, determine AFWs share price assuming an equity cost of capital of 12%.
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Introduction to Finance Markets, Investments and Financial Management
Authors: Ronald W. Melicher, Edgar A. Norton
16th edition
1119398282, 978-1-119-3211, 1119321115, 978-1119398288
