#16 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 willincrease 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 isyour estimate of Shatin's stock price after this announcement?The stock price will be $(Round to the nearest cent.)

Introduction:- The following formula used to Compute of Shatin's stock price as follows:-Stock price…

Answered: The stock price will be $[

Business

Accounting

The stock price will be $[

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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Question

#16

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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