You expect KT industries (KTI) will have earnings per share of $4 this year and expect that they will pay out $1.75 of these earnings to shareholders in the form of a dividend. KTI's return on new investments is 13% and their equity cost of capital is 10%. The value of a share of KTI's stock today is closest to ________.
A) $78.14
B) $39.07
C) $65.12
D) $26.05

Question

Quizplus · Accepted Answer

C) g = Retention rate × Return on new investment 11ea84dc_f563_52c2_9a63_b995ad81da16_TB1316_11_TB1316_11 11ea84dc_f563_52c3_9a63_f9f14297872e_TB1316_11_TB1316_11

You Expect KT Industries (KTI) Will Have Earnings Per Share