If it expects to keep the same payout ratio and to earn 20


The XYZ Company (an all-equity firm) currently has after-tax operating cash flows of $3.00 per share and pays out 5011 of its earnings in dividends.

If it expects to keep the same payout ratio, and to earn 20% on future investments forever, what will its current price per share be? Assume that the cost of capital is 15%.

Request for Solution File

Ask an Expert for Answer!!
Financial Management: If it expects to keep the same payout ratio and to earn 20
Reference No:- TGS01651307

Expected delivery within 24 Hours