Zoom Enterprises expects that one year from now it will pay a total dividend of $5 million

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Zoom Enterprises expects that one year from now it will pay a total dividend of $5 million and repurchase $5 million worth of shares. It plans to spend $10 million on dividends and repurchases every year after that forever, although it may not always be an even split between dividends and repurchases. If Zoom’s equity cost of capital is 13% and it has 5 million shares outstanding, what is its share price today?

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Fundamentals Of Corporate Finance

ISBN: 9780135811603

5th Edition

Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford

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