Need help with this general accounting question Tarmac Airlines has 115 million shares outstanding and expectsearnings at the end of this year of $370 million. Tarmac plans to payout 40% of its earnings as a dividend and 20% of its earningsthrough share repurchases. The firm has an equity cost of capital of8%. If Tarmac's earnings are expected to grow by 3% per year andthese payout rates remain constant, what is Tarmac's share price?A) $64.35B) $24.13C) $16.09D) $38.61E) $25.74

Calculate the Share Price Using Gordon Growth Model:P= D/(r-g) P = Share pricer = Cost of equity…

Answered: Tarmac Airlines has 115 million shares…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 15P

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