Tolo Co. plans the following repurchases: $10.4 million in one year, nothing in two years, and $19.2 million in three years. After that, it will stop repurchasing and will issue dividends totaling $25.7 million in four years. The total paid in dividends is expected to increase by 2.9% per year thereafter. If Tolo has 2.3 million shares outstanding and an equity cost of capital of 10.7%, what is its price per share today?

Tolo Co. plans the following repurchases: $10.4 million in one year, nothing in two years, and $19.2 million in three years. After that, it will stop repurchasing and will issue dividends totaling $25.7 million in four years. The total paid in dividends is expected to increase by 2.9% per year thereafter. If Tolo has 2.3 million shares outstanding and an equity cost of capital of 10.7%, what is its price per share today?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter4: Financial Planning And Forecasting

Section: Chapter Questions

Problem 9P

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