Question: Suppose Amazon com Inc pays no dividends but spent 2 billion
Suppose Amazon.com Inc. pays no dividends but spent $2 billion on share repurchases last year. If Amazon’s equity cost of capital is 8%, and if the amount spent on repurchases is expected to grow by 6% per year, estimate Amazon’s market capitalization. If Amazon has 450 million shares outstanding, what stock price does this correspond to?
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