This question is incomplete, the complete one was gotten from google.
Taggart Transcontinental pays no dividends, but spent $4 billion on share repurchases last year. Taggart's equity cost of capital is 13% and the amount spent on repurchases is expected to grow by 5% per year. Taggart currently has 2 billion shares outstanding.
Taggart's stock price is closest to:
A. $25.00
B. $12.50
C. $15.40
D. $20.00
Answer:
Taggart Transcontinental pays no dividends, but spent $4 billion on share repurchases last year. Taggart's equity cost of capital is 13% and the amount spent on repurchases is expected to grow by 5% per year. Taggart currently has 2 billion shares outstanding.
Taggart's stock price is closest to $25 - option A.
Explanation:
Market capitalization = 4/ (0.13 -0.05)
= 4/0.08
Market capitalization = 50
Price per share = 50/2 = $25
Therefore, Taggart's stock price is closest to $25 - option A.
