Question: 1. When would the total payout model be most reliable to use? (a) If the firm undertakes share repurchases. (b) If dividends are expected to

1. When would the total payout model be most reliable to use?

(a) If the firm undertakes share repurchases.

(b) If dividends are expected to grow at a constant expected rate.

(d) If looking to find present value of the future dividends the firm will pay.

2. PDQ Corporation is forecast to have total earnings of $1 billion next year and to pay out a total of 21% of these earnings to shareholders in the form of share repurchases and dividends. PDQ Corporation has 100 million shares outstanding. Its earnings are forecast to grow at a rate of 6% constantly. The stock's required rate of return is 10%. What is the value of a share today? Answer in dollars and round to the nearest cent.

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