year of $800 million. Valence pays out 40% of its earnings in total - 15% paid out as dividends and 25% used to repurchase shares. If Valence's earnings are expected to grow by 7% per year, these payout rates do not change, and Valence's equity cost of capital is 10%, what is Valence's share price? A. $38.10 B. $14.29 C. $7.14 D. $47.62 I

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
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year of $800 million. Valence pays out 40% of its earnings in total - 15% paid out as
dividends and 25% used to repurchase shares. If Valence's earnings are expected to grow
by 7% per year, these payout rates do not change, and Valence's equity cost of capital is
10%, what is Valence's share price?
A. $38.10
B. $14.29
C. $7.14
D. $47.62
I
Transcribed Image Text:year of $800 million. Valence pays out 40% of its earnings in total - 15% paid out as dividends and 25% used to repurchase shares. If Valence's earnings are expected to grow by 7% per year, these payout rates do not change, and Valence's equity cost of capital is 10%, what is Valence's share price? A. $38.10 B. $14.29 C. $7.14 D. $47.62 I
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