Shatin Intl. has 9.8 million shares, an equity cost of capital of 12.7% and is expected to

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Shatin Intl. has 9.8 million shares, an equity cost of capital of 12.7% and is expected to pay a total dividend of $20.7 million each year forever. It announces that it will increase its payout to shareholders. Instead of increasing its dividend, it will keep it constant and will start repurchasing $10.4 million of stock each year as well. How much will its stock price increase?

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Fundamentals Of Corporate Finance

ISBN: 9781292437156

5th Global Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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