Use the Following Information to Answer the Question(s) Below

question 17

Multiple Choice

Use the following information to answer the question(s) below.
Wyatt Oil, an all-equity financed firm, has just reported EPS of $4.00 per share. Despite an economic downturn, Wyatt is confident regarding its current investment opportunities, but do to the current financial crisis, Wyatt does not wish to fund these investments externally. Wyatt's board has therefore decided to suspend its stock repurchase plan and cut its dividend to $1 per share (from its current level of $2 per share) and retain these funds instead. The firm just paid its current dividend of $1.00 per share and expects to keep its dividend at $1 per share next year as well. In subsequent years, it expects its growth opportunities to slow, and it will still be able to fund its growth internally with a target 40% dividend payout ratio, and reinitiating its stock repurchase plan for a total payout rate of 60%. All dividends and repurchases occur at the end of each year.
Wyatt's existing operations are expected to generate the current level of earnings per share in the future. Assume that the return on new investments is 16% and that reinvestments will account for all future earnings growth. Wyatt's current equity cost of capital is 12%.
-Wyatt's current stock price is closest to:

• A) $51.23
• B) $54.00
• C) $57.38
• D) $61.38

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Definitions:

Third-Wave Feminist

A phase of feminism that began in the early 1990s and focuses on individuality, diversity, and the redefinition of what it means to be a feminist.

Second-Wave

Often referring to the second wave of feminism that occurred during the 1960s to 1980s, focusing on issues such as equality in the workplace, reproductive rights, and legal inequalities.

Marginalized

Describes individuals or groups that are pushed to the edge of society where they hold little to no social, political, or economic power.

Queer Theory

An approach that seeks to question and challenge normative ideas of gender and sexuality, focusing on the fluidity and social construction of these concepts rather than fixed identities.