NORDAM Group, a firm that specializes in the design and manufacturing of aircraft components, has

140

million shares outstanding and analysts expect NORDAM to have earnings of

$480

million this coming year (t=1). NORDAM plans to pay out

56%

of its earnings in dividends and they expect to use another

11%

of their earnings to repurchase shares. NORDAMs equity cost of capital is

10%.

Its earnings are expected to grow at a rate of 3% per year and these payout rates are expected to remain constant. What is the value of one share of NORDAM stock today?

A.

$5.39

B.

$27.43

C.

$48.98

D.

$32.82

E.

$22.97

F.

None of the above answers is within $0.05 of the correct answer.