AFW Industries has 195 million shares outstanding and expects earnings at the end of this year of $651 million. AFW plans to pay out 56% of its earnings in total, paying 30% as a dividend and using 26% to repurchase shares. If AFW's earnings are expected to grow by 7.7% per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 11.2%. The price per share will be $ (Round to the nearest cent.)
AFW Industries has 195 million shares outstanding and expects earnings at the end of this year of $651 million. AFW plans to pay out 56% of its earnings in total, paying 30% as a dividend and using 26% to repurchase shares. If AFW's earnings are expected to grow by 7.7% per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 11.2%. The price per share will be $ (Round to the nearest cent.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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AFW Industries has 195 million shares outstanding and expects eamings at the end of this year of $651 million. AFW plans to pay out
56% of its earnings in total, paying 30% as a dividend and using 26% to repurchase shares. If AFW's earnings are expected to grow by
7.7% per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 11.2%.
The price per share will be $
(Round to the nearest cent.)
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