23In the year to June 30, 2012 (yesterday) Initech paid out $1.15B individends and repurchased $7.225B worth of shares. Initech has 1.22Bshares outstanding and pays all of its dividends and makes itsrepurchases annually on June 30. Because of the slow-down in theeconomy, analysts expect that for the next two years (June 30, 2013 andJune 30, 2014) Initech will hold dividend payments constant at their2012 level and cancel its stock repurchase program. Three years fromnow (June 30, 2015) analysts forecast that total payouts will return tothe level of June 30, 2012. After that date they will continue growing atan annual rate of 3.0% in perpetuity. Assume that investors require a13.5% rate of return on Initech shares. What is the Total Payout modelestimate of the stock price on July 1, 2012?*$52.31A)B)C)D)E)$46.28$59.16$56.91$60.16

The constant growth model is a stock valuation method used in finance to determine a stock's…

Answered: all annual rate of 0.050 po 13.5% rate…

all annual rate of 0.050 po 13.5% rate of return on Initech shares. What is the Total Payout model estimate of the stock price on July 1, 2012? *$52.31 $46.28 $59.16 $56.91 $60.16 A) B) C) D) E)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 25P

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