Halliford Corporation expects to have earnings this coming year of $2.65 per share. Halliford plans to...

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Halliford Corporation expects to have earnings this coming yearof $2.65 per share. Halliford plans to retain all of its earningsfor the next two years. For the subsequent two? years, the firmwill retain 46% of its earnings. It will then retain 22% of itsearnings from that point onward. Each? year, retained earnings willbe invested in new projects with an expected return of 25.69% 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 8.6%?, what price would youestimate for Halliford? stock?
Note: Remember that growth rate is computed? as: retention ratetimes× rate of return.

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Halliford Corporation expects to have earnings this coming yearof $2.65 per share. Halliford plans to retain all of its earningsfor the next two years. For the subsequent two? years, the firmwill retain 46% of its earnings. It will then retain 22% of itsearnings from that point onward. Each? year, retained earnings willbe invested in new projects with an expected return of 25.69% 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 8.6%?, what price would youestimate for Halliford? stock?Note: Remember that growth rate is computed? as: retention ratetimes× rate of return.