At what price will the new shares be issued in year 1

Reference no: EM13282451

Random Corp. has outstanding 155 million shares with a total market value of $250 million. Financial analysts expect the firm to pay $10.7 million of dividends next year, and every following year in the perpetuity. However, the company announces all of a sudden that next year's dividend will be increased to $50 million and that the extra cash will be raised immediately by an issue of shares. After that, the amount paid out each year will be as previously forecasted. At what price will the new shares be issued in year 1?

Reference no: EM13282451

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