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Market price of the stock one year from now

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Because it has no plans for reinvestment, Kayyes Corporation is expected to continue paying out 100% of its earnings as a dividend. EBIT is expected to be $1,000,000 per year indefinitely. There is no debt in Kayyes capital structure, it has 100,000 shares of common stock outstanding, and the corporate tax rate is 40%. The next dividend is one year from now. The required rate of return on equity is 10%. Calculate the dividend per share each year, the current market price for Kayyes' stock, and the market price of the stock one year from now.

Reference no: EM131086451

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