Halliford Corporation expects to have earnings this coming year of per $2.771 share. Halliford plans to retain all of it

Post by **answerhappygod** » Sun Apr 17, 2022 6:23 pm

Halliford Corporation expects to have earnings this coming year
of per $2.771 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 19% of its
earnings from that point onward. Each year, retained earnings will
be invested in new projects with an expected return of 24.2% 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 11.4%, what price would you
estimate for Halliford stock?