You are trying to estimate the share price for MidStream Inc. You have forecasted the  information about earnings and payouts to shareholders for the next five years (see table below). In addition, you know that after year 5 the company will maintain a constant payout rate of 60% in perpetuity. The company's equity cost of capital ( ) is 12%, its return on new investment is 13%, and it currently has 100 million shares outstanding. 

What is a good estimate for the firm's share price?

Answer rating: 100% (QA)

To estimate the share price for MidStream Inc we can use the dividend discount model DDM approach The DDM calculates the present value of all future d... View the full answer