Mahindra Corp has 170 million shares outstanding and expects earnings of $685 mi

Question

Mahindra Corp has 170 million shares outstanding and expects earnings of $685 million at the end of this year. It plans to pay out 64% of earnings in total in the future. Mahindra's earnings are expected to grow by 7% per year indefinitely. Mahindra's stock price, assuming an equity cost of capital of 12%, is $____________per share? Mahindra Corp has 170 million shares outstanding and expects earnings of $685 million at the end of this year. It plans to pay out 64% of earnings in total in the future. Mahindra's earnings are expected to grow by 7% per year indefinitely. Mahindra's stock price, assuming an equity cost of capital of 12%, is $____________per share? Mahindra Corp has 170 million shares outstanding and expects earnings of $685 million at the end of this year. It plans to pay out 64% of earnings in total in the future. Mahindra's earnings are expected to grow by 7% per year indefinitely. Mahindra's stock price, assuming an equity cost of capital of 12%, is $____________per share?

Explanation / Answer

Dividend at the end of the year:

= $685 million×64%÷170 million:

= $2.58 per share

Share price:

= $2.58÷(12%-7%)

= $51.6

Related Questions

Navigate

• Browse (All)
• Browse M
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.