Jumbo Transport,an Air-Cargo Company,expects to Have Earnings Per Share of $2.50

question 52

Multiple Choice

Jumbo Transport,an air-cargo company,expects to have earnings per share of $2.50 in the coming year.It decides to retain 20% of these earnings in order to lease new aircraft.The return on this investment will be 25%.If its equity cost of capital is 12%,what is the expected share price of Jumbo Transport?

• A)$16.67
• B)$19.23
• C)$24.75
• D)$28.57

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Definitions:

Farming Area

Land designated and utilized for agricultural purposes to cultivate crops and rear animals for food and other products.

Secondary Ecological Succession

The process through which established communities are replaced by new ones in an area where a disturbance has destroyed the previous ecosystem but left the soil intact, fostering new growth cycles.

Second-growth Forest

A forest that has re-grown after a major disturbance, such as logging or fire, and differs from the original vegetation in species composition.

Storehouse

A room or building where goods, commodities, or provisions are stored.