Aaron IncHas 316 Million Shares Outstanding

question 16

Multiple Choice

Aaron Inc.has 316 million shares outstanding.It expects earnings at the end of the year to be $602 million.The firm's equity cost of capital is 11.5%.Aaron pays out 50% of its earnings in total: 30% paid out as dividends and 20% used to repurchase shares.If Aaron's earnings are expected to grow at a constant 6% per year,what is Aaron's share price?

• A)$8.66
• B)$17.32
• C)$25.98
• D)$34.64

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