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3 January, 22:58

Taggart Transcontinental pays no dividends, but spent $4 billion on share repurchases last year. Taggart's equity cost of capital is 13% and the amount spent on repurchases is expected to grow by 5% per year. Taggart currently has 2 billion shares outstandingA. $25.00

B. $12.50

C. $15.40

D. $20.00

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  1. 3 January, 23:08
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    This question is incomplete, the complete one was gotten from google.

    Taggart Transcontinental pays no dividends, but spent $4 billion on share repurchases last year. Taggart's equity cost of capital is 13% and the amount spent on repurchases is expected to grow by 5% per year. Taggart currently has 2 billion shares outstanding.

    Taggart's stock price is closest to:

    A. $25.00

    B. $12.50

    C. $15.40

    D. $20.00

    Answer:

    Taggart Transcontinental pays no dividends, but spent $4 billion on share repurchases last year. Taggart's equity cost of capital is 13% and the amount spent on repurchases is expected to grow by 5% per year. Taggart currently has 2 billion shares outstanding.

    Taggart's stock price is closest to $25 - option A.

    Explanation:

    Market capitalization = 4 / (0.13 - 0.05)

    = 4/0.08

    Market capitalization = 50

    Price per share = 50/2 = $25

    Therefore, Taggart's stock price is closest to $25 - option A.
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