What is the share price of nisocom industries

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Nisocom Industries is planning to distribute a dividend of $3 per share this year. It has an equity cost of capital of 10 percent. Moreover, its earnings are expected to grow at an annual rate of 4 percent.

Required:

Question a. What is the share price of Nisocom industries if it is assumed that the company has a constant expected growth rate and dividend payout rate and that it does not repurchase or issue shares?

Question b. If we assume that it pays $1 as a dividend this year and utilize the remaining $2 per share for the share buyback, then what is the share price of the company keeping the total payout rate constant?

Question c. Next, calculate the expected growth rates of earnings and dividends per share if the company maintains the total payout and dividend rate calculated in part b.

Reference no: EM132708353

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