A firm has 9.0 million shares outstanding and expects its earnings at the end of the year to be $54 million.

The firm's equity cost of capital is 10.6%. The firm plans to use 35% of its earnings each year to pay dividends and/or repurchase shares. If earnings are expected to grow at approximately 4.0% per year, What should be the firm's share price?

Answer rating: 100% (QA)

To calculate the firms share price we need to use the dividend discount model which states that the ... View the full answer