Question:1.
Tolo Co. is planning to buy back shares as follows. Buys of $10
million after...
Question
1.
Tolo Co. is planning to buy back shares as follows. Buys of $10
million after...
1.
Tolo Co. is planning to buy back shares as follows. Buys of $10
million after 1 year, not after 2 years, and $20 million after 3
years. After that, the company stopped buying treasury shares and
paid $25 million in total dividends for the fourth year. The total
dividend payout is expected to grow by 3% every year from then on.
If Tolo has 2 million shares issued and the cost of equity capital
is 11%, what is the price per share today?
2. Compco Systems last year spent 5 billion% of its share
buybacks without paying dividends. Assuming that Comco's cost of
equity capital is 12% and its share buybacks grow by 8% per year,
estimate the market capitalization of Comco. If the number of
outstanding shares is 6 billion, what is the price of that
share?