Shatin Intl. has 10.4 million shares, an equity cost of capital of 13.3% and is expected to pay a total dividend of $20.8 million each year forever. It announces that it will increase its payout to shareholders. Instead of increasing its dividend, it will keep it constant and will start repurchasing $9.9 million of stock each year as well. What is your estimate of Shatin's stock price after this announcement? The stock price will be $ (Round to the nearest cent)

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
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Shatin Intl. has 10.4 million shares, an equity cost of capital of 13.3% and is expected to pay a total dividend of $20.8 million each year
forever. It announces that it will increase its payout to shareholders. Instead of increasing its dividend, it will keep it constant and will start
repurchasing $9.9 million of stock each year as well. What is your estimate of Shatin's stock price after this announcement?
The stock price will be $ (Round to the nearest cent.)
Transcribed Image Text:Shatin Intl. has 10.4 million shares, an equity cost of capital of 13.3% and is expected to pay a total dividend of $20.8 million each year forever. It announces that it will increase its payout to shareholders. Instead of increasing its dividend, it will keep it constant and will start repurchasing $9.9 million of stock each year as well. What is your estimate of Shatin's stock price after this announcement? The stock price will be $ (Round to the nearest cent.)
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