Chittenden Enterprises Has 632 Million Shares on Issue

question 10

Multiple Choice

Chittenden Enterprises has 632 million shares on issue. It expects earnings at the end of the year to be $940 million. The firm's equity cost of capital is 10%. Chittenden pays out 30% of its earnings in total: 20% paid out as dividends and 10% used to repurchase shares. If Chittenden's earnings are expected to grow at a constant 4% per year, what is Chittenden's share price?

• A) $14.88
• B) $3.36
• C) $7.44
• D) $4.96

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Definitions:

Unadjusted Trial Balance

A preliminary report that lists all account balances within the company's ledger before adjustments are made for the preparation of final financial statements.