Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Shatin Intl. has 9.9 million shares, an equity cost of capital of 12.8% and is expected to pay a total dividend of $20.2 million each

image text in transcribed
Shatin Intl. has 9.9 million shares, an equity cost of capital of 12.8% and is expected to pay a total dividend of $20.2 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 $9.5 million of stock each year as well. What is your estimate of Shatin's stock price after this announcement? The stock price will be $. (Round to the nearest cent.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored 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

International Finance Theory And Policy

Authors: Paul R. Krugman, Maurice Obstfeld, Marc J Melitz,

11th Edition

013451954X, 9780134519548

More Books

Students also viewed these Finance questions

Question

Evaluate criticisms of DSM-5.

Answered: 1 week ago

Question

1.2 Describe who performs HRM.

Answered: 1 week ago