FW Industries has 196 million shares outstanding and expects earnings at the end of next year of $672 million. AFW plans to pay out 60% of its earnings in total, paying 34% as a dividend and using 26% to repurchase shares. If AFW's earnings are expected to grow by 8.9% per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 11.1%. The price per share will be $____ (Round to the nearest cent.)
FW Industries has 196 million shares outstanding and expects earnings at the end of next year of $672 million. AFW plans to pay out 60% of its earnings in total, paying 34% as a dividend and using 26% to repurchase shares. If AFW's earnings are expected to grow by 8.9% per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 11.1%. 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
Problem 1PS
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AFW Industries has 196 million shares outstanding and expects earnings at the end of next year of $672 million. AFW plans to pay out 60% of its earnings in total, paying 34% as a dividend and using 26% to repurchase shares. If AFW's earnings are expected to grow by 8.9% per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 11.1%.
The price per share will be $____
(Round to the nearest cent.)
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