Halliford Corporation expects to have earnings this coming year of $3.126 per share. Halliford plans to retain all of it
Posted: Mon Nov 15, 2021 4:58 pm
Halliford Corporation expects to have earnings this coming year
of
$3.126
per share. Halliford plans to retain all of its earnings for the
next two years. Then, for the subsequent two years, the
firm will retain
45%
of its earnings. It will retain
19%
of its earnings from that point onward. Each year,
retained earnings will be invested in new projects with an expected
return of
26.3%
per year. Any earnings that are not retained will be paid out as
dividends. Assume Halliford's share count remains constant
and all earnings growth comes from the investment of retained
earnings. If Halliford's equity cost of capital is
11.1%,
what price would you estimate for Halliford stock?
of
$3.126
per share. Halliford plans to retain all of its earnings for the
next two years. Then, for the subsequent two years, the
firm will retain
45%
of its earnings. It will retain
19%
of its earnings from that point onward. Each year,
retained earnings will be invested in new projects with an expected
return of
26.3%
per year. Any earnings that are not retained will be paid out as
dividends. Assume Halliford's share count remains constant
and all earnings growth comes from the investment of retained
earnings. If Halliford's equity cost of capital is
11.1%,
what price would you estimate for Halliford stock?