Question 3

You are trying to value the stock of XYZ Corp. Total earnings for year 1 are forecasted to be $157 million. You know that the company plans on paying out 11% of its earnings in the form of dividends and 27% in the form of share repurchases each year, and that all of the growth in future earnings will be through retained earnings. The company's return on new investment is 15%, its cost of equity is 12% and it has 87 million shares outstanding. Given this information, estimate the current share price for XYZ Corp. Round your answer to two decimals (do not include the $-symbol in your answer).