Zoom Enterprises expects that one year from now it will pay a total dividend of $5.1 million and repurchase $5.1 million worth of shares. It plans to spend $10.2 million on dividends and repurchases every year after that forever, although it may not always be an even split between dividends and repurchases. If Zoom's equity cost of capital is 12.3% and it has 4.9 million shares outstanding, what is its share price today?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter15: Dividend Policy
Section: Chapter Questions
Problem 15P
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Zoom Enterprises expects that one year from now it will pay a total dividend of $5.1 million and repurchase $5.1 million worth of shares. It plans to spend $10.2 million
on dividends and repurchases every year after that forever, although it may not always be an even split between dividends and repurchases. If Zoom's equity cost of
capital is 12.3% and it has 4.9 million shares outstanding, what is its share price today?
Transcribed Image Text:Zoom Enterprises expects that one year from now it will pay a total dividend of $5.1 million and repurchase $5.1 million worth of shares. It plans to spend $10.2 million on dividends and repurchases every year after that forever, although it may not always be an even split between dividends and repurchases. If Zoom's equity cost of capital is 12.3% and it has 4.9 million shares outstanding, what is its share price today?
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