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The Taylor Firm had revenues of $5.75 million and...

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The Taylor Firm had revenues of $5.75 million and costs of $2.3 million. Taylor pays no taxes and pays out all earnings as a dividend. There are one million shares outstanding. Taylor is considering a project that will require the firm to invest $15 million today and another $8 million in year 2. The project will increase earnings in the first year by $5 million. That increase in earnings is expected to continue forever and grow at 5%. If the required return on the Taylor Firm is 15%, what is the per share stock price if the firm undertakes the project?,I have some questions regarding your method for solving this problem. Please see attached file. My questions/logic are in blue font. Thank you.

 

Paper#8612 | Written in 18-Jul-2015

Price : $25
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