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I'm having trouble with the following homework problem from a finance class. Bent Co. at the end of the year will have EPS of $5
I'm having trouble with the following homework problem from a finance class.
Bent Co. at the end of the year will have EPS of $5 and if the firm has a cost of capital of 12%:
A) if the firm decides to pay out all earnings as dividends, what would today's firm value be?
B) if the firm decides to pay out 75%, 50%, or 25% of earnings, and the firm's return on investment is 15%, what firm value will the company have?
That's all of the information provided. Any help would be much appreciated.
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