The Rufus Corporation has 125 million shares outstanding and analysts expect Rufus to have earnings of $500 million this year. Rufus plans to pay out 40% of its earnings in dividends and they expect to use another 20% of their earnings to repurchase shares. If Rufus’ equity cost of capital is 15% and Rufus’ earnings are expected to grow at a rate of 3% per year, then the value of a share of Rufus stock is closest to: Answer A. $16.00 B. $13.35 C. $20.00 D. $33.50
The Rufus Corporation has 125 million shares outstanding and analysts expectRufus to have earnings of $500 million this year. Rufus plans to pay out 40% of itsearnings in dividends and they…
