Suppose Compco Systems pays no dividends but spent $5.15 billion on share repurchases last year. If Compco's equity cost of capital is12.3%, and if the amount spent on repurchases is expected to grow by 8.9% per year, estimate Compco's market capitalization. If Compcohas 5.9 billion shares outstanding, to what stock price does this correspond?

Equity cost of capital refers to the sum value of money a corporation needs to pay in order to fund…

Answered: 2.3%, and if the amount spent on…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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2.3%, and if the amount spent on repurchases is expected to grow by 8.9% pe as 5.9 billion shares outstanding, to what stock price does this correspond?