Valence Electronics Has 213 Million Shares Outstanding

question 53

Multiple Choice

Valence Electronics has 213 million shares outstanding. It expects earnings at the end of the year of $800 million. Valence pays out 40% of its earnings in total-15% paid out as dividends and 25% used to repurchase shares. If Valence's earnings are expected to grow by 7% per year, these payout rates do not change, and Valence's equity cost of capital is 9%, what is Valence's share price?

• A) $11.27
• B) $22.54
• C) $60.10
• D) $75.12

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Definitions:

Cash-to-cash Cycle

The time period between when a business pays for its inventory and when it receives cash from the sale of that inventory.

Timing

The selection of the most appropriate point or period to initiate or execute an action to achieve the desired outcome.

Open-book Management

A management strategy where employees are given access to financial information about the company to involve them more in its operations.

Macro-aging Schedule

A method used in financial analysis that categorizes accounts receivable or other financial assets based on the period of time they have been outstanding.