Heid's Ltd.'s stock price is $45 per share and the company expects to have earnings per share
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Question:
Heid's Ltd.'s stock price is $45 per share and the company expects to have earnings per share of $5.12 in the coming year. The company's current policy is to pay out all earnings as dividends. For the upcoming year the board is considering a cut in the dividend payout ratio to 67%. Assume Heid's ROE is 4.70%. If its required rate of return is unchanged, what would be its share price if they go ahead with the cut in dividend?
A) $55.98
B) $30.12
C) $34.91
D) $42.45
E) $38.74
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
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