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 comingyear (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 areexpected 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. $35.38OB. $18.51OC. $24.06OD. $4.60OE. $19.46OF. None of the above answers is within $0.05 of the correct answer.←

Stock price refers to the price at which the stocks are being traded in the market between the investors for the purpose of earning profits which is calculated by dividing the total earnings by the outstanding shareholders.Excel workings:values:Hence, option (C) is correct as the value of one share of stock today is $24.06

Answered: NORDAM Group, a firm that specializes…

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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