Earnings growth comes from investment of retained earnings

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Halliford Corporation expects to have earnings this coming year of $3.29 per share. Halliford plans to retain all of its earnings for the next two years. For the subsequent two? years, the firm will retain 52% of its earnings. It will then retain 17% of its earnings from that point onward. Each? year, retained earnings will be invested in new projects with an expected return of 22.67% per year. Any earnings that are not retained will be paid out as dividends. Assume? Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If? Halliford's equity cost of capital is 11.9%?, what price would you estimate for Halliford? stock?

Reference no: EM131359013

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