AFW Industries has 217 million shares outstanding and expects earnings at the end of this year of $653 million. AFW plans to payout 60% of its earnings in total, paying 35% as a dividend and using 25% to repurchase shares. If AFW's earnings are expected to grow by 7.1% per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 11.4%.

AFW Industries has 217 million shares outstanding and expects earnings at the end of this year of $653 million. AFW plans to payout 60% of its earnings in total, paying 35% as a dividend and using 25% to repurchase shares. If AFW's earnings are expected to grow by 7.1% per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 11.4%.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 15P

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