Cork Bottlers Has 84 Million Shares Outstanding and Expects Earnings

question 17

Multiple Choice

Cork Bottlers has 84 million shares outstanding and expects earnings at the end of this year of $54 million.Cork plans to pay out 30% of its earnings as a dividend and 10% of its earnings through share repurchases.The firm has an equity cost of capital of 12%.If Tarmac' earnings are expected to grow by 6.5% per year and these payout rates remain constant,what is Tarmac's share price?

• A)$5.24
• B)$2.14
• C)$4.68
• D)$3.51
• E)$11.69

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Definitions:

Bioinformatics

The application of computer technology to the management of biological information, particularly in the fields of genetics and genomics.

Multicellular Adult

An organism that has developed to its mature form, consisting of many cells organized into tissues and organs.

Genetics

The scientific study of genes, heredity, and the variation of organisms, which explains how traits are passed from parents to offspring.

Homeostasis

The self-regulating process by which biological systems tend to maintain stability while adjusting to conditions that are optimal for survival.