Boost your Grades with us today!


Surf & Turf Hotels is a mature business, although it pays no cash dividends. Next year’s earnings are forecast at $78 million. There are 10 million outstanding shares. The company has traditionally used 60% of earnings to repurchase shares of stock and has reinvested the remaining earnings. With reinvestment, the company has generated steady growth averaging 4% per year. Assume the cost of equity is 9%.

a. Calculate Surf & Turf’s current stock price. (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Answer is complete but not entirely correct.
Stock price $ 62.40 X per share
b. Now Surf & Turf’s CFO announces a switch from repurchases to a regular cash dividend. Next year’s dividend will be $4.70 per share. The CFO reassures investors that the company will continue to pay out 60% of earnings and reinvest 40%. All future payouts will come as dividends, however. What would you expect to happen to Surf & Turf’s stock price? Ignore taxes.
Answer is complete and correct.
The price will increase


15% off for this assignment.

Our Prices Start at $11.99. As Our First Client, Use Coupon Code GET15 to claim 15% Discount This Month!!

Why US?

100% Confidentiality

Information about customers is confidential and never disclosed to third parties.

Timely Delivery

No missed deadlines – 97% of assignments are completed in time.

Original Writing

We complete all papers from scratch. You can get a plagiarism report.

Money Back

If you are convinced that our writer has not followed your requirements, feel free to ask for a refund.