You Expect KT Industries (KTI)will Have Earnings Per Share of $3

question 3

Multiple Choice

You expect KT industries (KTI) will have earnings per share of $3 this year and expect that they will pay out $1.50 of these earnings to shareholders in the form of a dividend.KTI's return on new investments is 15% and their equity cost of capital is 12%.The value of a share of KTI's stock is closest to:

• A) $39.25
• B) $20.00
• C) $33.35
• D) $12.50

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Definitions:

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded, also known as the market-clearing price.

Equilibrium Quantity

The quantity of goods or services that are supplied and demanded at the equilibrium price, where the amount producers are willing to sell equals the amount consumers are willing to buy.

Price of Ingredients

The cost of raw materials used in the production of goods, which can impact the final price of the product and profitability of producers.

Cattle Feed

A type of food specifically formulated and provided for the dietary needs of cattle, including grains, hay, and other nutrients.