Alphabet (GOOGL) has yet to pay a dividend, but in spring 2018 it announced it would repurchase
Question:
Alphabet (GOOGL) has yet to pay a dividend, but in spring 2018 it announced it would repurchase $8.5 billion worth of shares over the year. (Actually, the exact amount was $8,589,869,056—known as a “perfect” number because it is equal to the sum of its divisors). If the amount spent on share repurchases were expected to grow by 7% per year, and Alphabet’s equity cost of capital is 8%, estimate Alphabet’s market capitalization. If Alphabet has 700 million shares outstanding, what stock price does this correspond to?
Step by Step Answer:
Calculation of the share price Share price Repurch...View the full answer
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Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.
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