The XYZ Company (an all-equity firm) currently has after-tax operating cash flows of $3.00 per share and

Question:

The XYZ Company (an all-equity firm) currently has after-tax operating cash flows of $3.00 per share and pays out 50% of its earnings in dividends. If it expects to keep the same payout ratio, and to earn 20% on future investments forever, what will its current price per share be? Assume that the is 15%.
Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...