Halliford Corporation expects to have earnings this coming year of $3.142 per share. Halliford plans to retain all of it
Posted: Tue Nov 16, 2021 7:52 am
Halliford Corporation expects to have earnings this coming year
of $3.142 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
50% of its earnings. It will retain 22% of its earnings from
that point onward. Each year, retained earnings will be
invested in new projects with an expected return of
19.6% 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
10.7%, what price would you estimate for
Halliford stock?
of $3.142 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
50% of its earnings. It will retain 22% of its earnings from
that point onward. Each year, retained earnings will be
invested in new projects with an expected return of
19.6% 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
10.7%, what price would you estimate for
Halliford stock?