Answered step by step
Verified Expert Solution
Link Copied!

Question

00
1 Approved Answer

Shatin Intl. has 10 million shares, an equity cost of capital 14%, and is expected to pay a total dividend of $18 million each year

image text in transcribed

Shatin Intl. has 10 million shares, an equity cost of capital 14%, and is expected to pay a total dividend of $18 million each year forever. It announces that it will increase its payout to shareholders. Instead of increasing its dividend, it will keep it constant and will start repurchasing $12 million of stock each year as well. How much will its stock price increase? The stock price will increase by $ (Round to the nearest cent.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Fundamentals Of Corporate Finance

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

3rd Edition

9780133507676

More Books

Students also viewed these Finance questions