Titan Aero Technologies earned $22 million for the fiscal year ending yesterday. The firm also paid out 35% of its earnings as dividends. The firm will continue to pay out 35% of its earnings as annual, end-of-year dividends. The remaining 65% of earnings is retained by the company for future projects. The company has 2.5 million shares of common stock outstanding. The current stock price is $105. The historical return on equity (ROE) of 14% is expected to continue in the future. Calculate the required rate of return on the stock for Titan Aero Technologies.
Titan Aero Technologies earned $22 million for the fiscal year ending yesterday. The firm also paid out 35% of its earnings as dividends. The firm will continue to pay out 35% of its earnings as annual, end-of-year dividends. The remaining 65% of earnings is retained by the company for future projects. The company has 2.5 million shares of common stock outstanding. The current stock price is $105. The historical return on equity (ROE) of 14% is expected to continue in the future. Calculate the required rate of return on the stock for Titan Aero Technologies.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Titan Aero Technologies earned $22 million for the fiscal year
ending yesterday. The firm also paid out 35% of its earnings as
dividends. The firm will continue to pay out 35% of its earnings as
annual, end-of-year dividends. The remaining 65% of earnings is
retained by the company for future projects. The company has
2.5 million shares of common stock outstanding. The current
stock price is $105. The historical return on equity (ROE) of 14% is
expected to continue in the future.
Calculate the required rate of return on the stock for Titan Aero
Technologies.
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