Question 16? NORDAM Group, a firm that specializes in the design and manufacturing ofaircraft components, has 130 million shares outstanding and analysts expectNORDAM to have earnings of $480 million this coming year (t=1). NORDAMplans to pay out 59% of its earnings in dividends and they expect to use another14% of their earnings to repurchase shares. NORDAM's equity cost of capital is10%. Its earnings are expected to grow at a rate of 3% per year and thesepayout rates are expected to remain constant. What is the value of one share ofNORDAM stock today?...O A. $31.12B. $26.95O C. $52.75D. $38.51O E. $7.38O F.None of the above answers is within $0.05 of the correct answer.

As per the DDM Model, value of stock in year 0 = D1/(r-g) D1 = Dividend next year r = Required rate…

Answered: Ow at a rate of 3% per year and these…

Ow at a rate of 3% per year and these payout rates are expected to remain constant. What is the value of one share of NORDAM stock today? ... O A. $31.12 B. $26.95

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 1P: Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1...

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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

Question 16?

NORDAM Group, a firm that specializes in the design and manufacturing of
aircraft components, has 130 million shares outstanding and analysts expect
NORDAM to have earnings of $480 million this coming year (t=1). NORDAM
plans to pay out 59% of its earnings in dividends and they expect to use another
14% of their earnings to repurchase shares. NORDAM's equity cost of capital is
10%. Its earnings are expected to grow at a rate of 3% per year and these
payout rates are expected to remain constant. What is the value of one share of
NORDAM stock today?
...
O A. $31.12
B. $26.95
O C. $52.75
D. $38.51
O E. $7.38
O F.
None of the above answers is within $0.05 of the correct answer.

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