Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

AYAYAI Ltd. had earnings per share of $4 as of December 31, 2022, but paid no dividends. Earnings were expected to grow at 14.7 percent

AYAYAI Ltd. had earnings per share of $4 as of December 31, 2022, but paid no dividends. Earnings were expected to grow at 14.7 percent per year for the following five years. AYAYAI Ltd. will start paying dividends for the first time on December 31, 2027, distributing 50 percent of its earnings to shareholders. Earnings growth will be 5 percent per year for the next six years (that is, from January 1, 2028, through to December 31, 2033). Starting on December 31, 2033, AYAYAI Ltd. will begin to pay out 80 percent of its earnings in dividends and earnings growth will stabilize at 2 percent per year in perpetuity.The required rate of return on AYAYAI stock is 10 percent. What should be the current share price of AYAYAI?

this is all the question gave me !!!! please answer ! thank you

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

Accounting Ledger Book

Authors: Alpha Planners Publishing

1st Edition

B09VWKPJSG, 979-8432472564

More Books

Students also viewed these Finance questions

Question

How does cultural context affect communication? [LO-6]

Answered: 1 week ago