Problem:
Buckeye Transport is in a declining industry. It expects to pay a dividend of $1.85 at the end of the year. Its earnings and dividends to shareholders are expected to decline 4.5% per year thereafter.
Required:
Question: If its equity cost of capital is 12%, what is the expected share price of Buckeye Transport?
- $18.50
- $11.21
- $24.67
- $15.42
Note: Please provide full description.