Yamana Gold Inc. (AUY) currently no pays dividend but its new management will pay a dividend at the end of Year 4. Year 4 earnings are expected to be $2.97, and AUY will maintain a payout ratio of 47%. With an assumption that AUY’s constant growth rate is 3.42%, and a required rate of return of 7.17%, the present value of AUY is closest to A. $30.24. B. $49.71. C. $70.92. D. $91.86.

Yamana Gold Inc. (AUY) currently no pays dividend but its new management will pay a dividend at the end of Year 4. Year 4 earnings are expected to be $2.97, and AUY will maintain a payout ratio of 47%. With an assumption that AUY’s constant growth rate is 3.42%, and a required rate of return of 7.17%, the present value of AUY is closest to A. $30.24. B. $49.71. C. $70.92. D. $91.86.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 28P

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