Halliford Corporation expects to have earnings this coming year of $ 3.00 per share. Halliford plans...

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Halliford Corporation expects to have earnings this coming yearof $ 3.00 per share. Halliford plans to retain all of its earningsfor the next two years. For the subsequent two? years, the firmwill retain 50 % of its earnings. It will then retain 20 % of itsearnings from that point onward. Each? year, retained earnings willbe invested in new projects with an expected return of 25.00 % peryear. Any earnings that are not retained will be paid out asdividends. Assume? Halliford's share count remains constant and allearnings growth comes from the investment of retained earnings. If?Halliford's equity cost of capital is 10.0 %?, what price would youestimate for Halliford? stock? ?Note: Remenber that growth rate iscomputed? as: retention rate times rate of return. The price pershare is __________

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Growth rate formula Return on invstment Retention ratio Return on assets 25 Retention ratio of next 2 years 100 So Growth rate of first 3 years 25100 2500 For next 2 years after that retention ratio See Answer

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Halliford Corporation expects to have earnings this coming yearof $ 3.00 per share. Halliford plans to retain all of its earningsfor the next two years. For the subsequent two? years, the firmwill retain 50 % of its earnings. It will then retain 20 % of itsearnings from that point onward. Each? year, retained earnings willbe invested in new projects with an expected return of 25.00 % peryear. Any earnings that are not retained will be paid out asdividends. Assume? Halliford's share count remains constant and allearnings growth comes from the investment of retained earnings. If?Halliford's equity cost of capital is 10.0 %?, what price would youestimate for Halliford? stock? ?Note: Remenber that growth rate iscomputed? as: retention rate times rate of return. The price pershare is __________