(Lecture 8 Stock Valuation) ABC Inc. has not distributed dividends historically. It plans to spend $600 million on share repurchases one year later. The company has an equity beta of 1.1 and $300 shares outstanding. ABC's WACC is 4%. Given that the risk free rate is 1% and the expected market return is 8%, if ABC opts not to pay dividends going forward and the amount spent on repurchases is expected to decline by 2% per year, its stock price is $ per share. Instruction: Type ONLY your numerical answer, NO $ sign or comma sign needed, and round to the nearest two decimal places. E.g., if your answer is 18.763 then input 18.76.

Schnusenberg Corporation just paid a dividend of DO $2.10 per share, and that dividend is expected to grow at a constant rate of 6.50% per year in the future. The company's beta is 2.00, the required return on the market is 14.50%, and the risk - free rate is 4.50%. What is the company's current stock price? Do not round intermediate calculations. a. $12.43 b. $11.67 c. $9.13 d. $27.96 e. $34.41 =

Lengefeld Manufacturing expects to have earnings per share of $2 in the coming year. The firm does not have share repurchases. (1). Under the initial policy, the firm plans to pay out all of its earnings as a dividend rather than reinvest these earnings and grow. With these expectations of no growth of the firm's earnings and stock prices, Lengefeld's current stock price (Po) is $24. What is the expected stock return (i.e., equity cost of capital) per year under the initial policy? (2). Suppose Lengefeld could adopt a new policy by cutting its dividend payout rate to 50% for the foreseeable future and using the retained earnings to open an additional factory. The return on investment in the new factory is expected to be 15%. If we assume that the risk of the new factory is the same as the risk of its existing factories, then the firm's equity cost of capital is unchanged. What is the growth rate of the firm's earning (gnew) per year if the firm adopts this new policy? What is…

Maple Plc has never paid a dividend; however, it has just announced that it will pay an annual dividend of 5p next year, 8p the year after and 10p the year after that. From then on the firm expects dividends to grow at 5% per year. Earnings per share next year will be 7p. The firm has 10 million shares currently in issue and beta of the firm's shares is 1.7. The current riskless rate in the economy is 4% and the expected return on the stock market is 9%. a) Calculate the expected return (i.e. cost of capital) for equity holders in Maple Plc. b) What will the plow back ratio of the firm be next year? c) Calculate the current share price of the firm. d) If an investor had bought the share for £2 twelve months ago, calculate the Total Shareholder Return (TSR) for the year.