AFW Industries has 217 million shares outstanding andexpects earnings at the end of this year of $653 million.AFW plans to pay-out 60% of its earnings in total, paying35% as a dividend and using 25% to repurchase shares. IfAFW's earnings are expected to grow by 7.1% per year andthese pay-out rates remain constant, determine AFW'sshare price assuming an equity cost of capital of 11.4%.

Given Data:Shares Outstanding: 217 millionExpected Earnings: $653 millionTotal Payout: 60% of…

Answered: AFW Industries has 217 million shares…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 4P

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