The Rufus Corporation Has 125 Million Shares Outstanding and Analysts

question 39

Multiple Choice

The Rufus Corporation has 125 million shares outstanding and analysts expect Rufus to have earnings of $500 million this year.Rufus plans to pay out 40% of its earnings in dividends and they expect to use another 20% of their earnings to repurchase shares.If Rufus' equity cost of capital is 15% and Rufus' earnings are expected to grow at a rate of 3% per year,then the value of a share of Rufus stock is closest to:

• A)$13.35.
• B)$33.50.
• C)$20.00.
• D)$16.00.

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Definitions:

Horizontal Communication

The exchange of information between peers within the same level of an organization or environment, facilitating coordination and collaboration.

Vice-president

A senior executive position in a company responsible for overseeing specific business units, making strategic decisions, and representing the organization in certain capacities.

Chain of Command

The formal line of authority within an organization that dictates who reports to whom, from the highest executive to the lowest rank.

Effective Communication

The exchange of information in a way that is accurately received and understood by all parties involved.