NORDAM Group, a firm that specializes in the design and manufacturing of aircraft components, has 130 million shares outstanding and analysts expect NORDAM to have earnings of $460 million this comin year (t=1). NORDAM plans to pay out 55% of its earnings in dividends and they expect to use another 13% of their earnings to repurchase shares. NORDAM's equity cost of capital is 13%. Its earnings are expected to grow at a rate of 3% per year and these payout rates are expected to remain constant. What is the value of one share of NORDAM stock today? OA. $35.38 OB. $18.51 OC. $24.06 OD. $4.60 OE. $19.46 OF. None of the above answers is within $0.05 of the correct answer.
NORDAM Group, a firm that specializes in the design and manufacturing of aircraft components, has 130 million shares outstanding and analysts expect NORDAM to have earnings of $460 million this comin year (t=1). NORDAM plans to pay out 55% of its earnings in dividends and they expect to use another 13% of their earnings to repurchase shares. NORDAM's equity cost of capital is 13%. Its earnings are expected to grow at a rate of 3% per year and these payout rates are expected to remain constant. What is the value of one share of NORDAM stock today? OA. $35.38 OB. $18.51 OC. $24.06 OD. $4.60 OE. $19.46 OF. None of the above answers is within $0.05 of the correct answer.
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
Related questions
Question
![NORDAM Group, a firm that specializes in the design and manufacturing of aircraft components, has 130 million shares outstanding and analysts expect NORDAM to have earnings of $460 million this coming
year (t-1). NORDAM plans to pay out 55% of its earnings in dividends and they expect to use another 13% of their earnings to repurchase shares. NORDAM's equity cost of capital is 13%. Its earnings are
expected to grow at a rate of 3% per year and these payout rates are expected to remain constant. What is the value of one share of NORDAM stock today?
OA. $35.38
OB. $18.51
OC. $24.06
OD. $4.60
OE. $19.46
OF. None of the above answers is within $0.05 of the correct answer.
←](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe9583b3e-6ff6-40fa-a6f7-68d8d6061725%2F7a7c4360-70d5-4af3-a10f-19b207a70066%2Fr7h6ydx_processed.jpeg&w=3840&q=75)
Transcribed Image Text:NORDAM Group, a firm that specializes in the design and manufacturing of aircraft components, has 130 million shares outstanding and analysts expect NORDAM to have earnings of $460 million this coming
year (t-1). NORDAM plans to pay out 55% of its earnings in dividends and they expect to use another 13% of their earnings to repurchase shares. NORDAM's equity cost of capital is 13%. Its earnings are
expected to grow at a rate of 3% per year and these payout rates are expected to remain constant. What is the value of one share of NORDAM stock today?
OA. $35.38
OB. $18.51
OC. $24.06
OD. $4.60
OE. $19.46
OF. None of the above answers is within $0.05 of the correct answer.
←
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