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The stock price will be $[

The stock price will be $[

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Shatin Intl. has 9.8 million shares, an equity cost of capital of 13.3% and is expected to pay a total dividend of $20.7 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 9.8 million shares, an equity cost of capital of 13.3% and is expected to pay a total dividend of $20.7 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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