AFW Industries has 180 million shares outstanding and expects earnings at the end of this year of $735 million. AFW plans to pay out 56% of its earnings in total, paying 37% as a dividend and using 19% to repurchase shares. If AFW's earnings are expected to grow by 8.9% per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 12.6%. The price per share will be $ (Round to the nearest cent.)
AFW Industries has 180 million shares outstanding and expects earnings at the end of this year of $735 million. AFW plans to pay out 56% of its earnings in total, paying 37% as a dividend and using 19% to repurchase shares. If AFW's earnings are expected to grow by 8.9% per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 12.6%. The price per share will be $ (Round to the nearest cent.)
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 4P
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