Question
Shatin Intl. has 1010 millionshares, an equity cost of capital 13%, and is expected to pay a total dividend of $20 million each year forever.
Shatin Intl. has 1010 millionshares, an equity cost of capital 13%, and is expected to pay a total dividend of $20 million each year forever. It announces that it will increase its payout to shareholders. Instead of increasing itsdividend, it will keep it constant and will start repurchasing $10million of stock each year as well. How much will its stock priceincrease?
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Fundamentals of Corporate Finance
Authors: Richard Brealey, Stewart Myers, Alan Marcus, Devashis Mitra, Elizabeth Maynes, William Lim
6th Canadian edition
1259024962, 978-1259024962
