You Expect KT Industries (KTI) Will Have Earnings Per Share

question 36

Multiple Choice

You expect KT industries (KTI) will have earnings per share of $4 this year and expect that they will pay out $1.75 of these earnings to shareholders in the form of a dividend. KTI's return on new investments is 13% and their equity cost of capital is 10%. The value of a share of KTI's stock today is closest to ________.

• A) $78.14
• B) $39.07
• C) $65.12
• D) $26.05

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Definitions:

Market Shares

The portion of a market controlled by a particular company or product, often expressed as a percentage of total sales in the sector.

Herfindahl Index

An indicator of company sizes within an industry, showing the level of competitive interaction among them.

Clayton Act

A U.S. antitrust law enacted in 1914 aimed at preventing monopolies and unfair business practices that may hinder competition.