Answer:
$17.14
Explanation:
29/149)+0.02 = 21.46%= Discount rate
Year 1
=(1+.2146)*149 = $180.98
Company repurchases = 73,805/180.98 = 408 shares
Number of shares outstanding = 5,090-408 = 4,682 shares
Dividend payment in year 1 falls to 5,090 x 14.50 = 73,805 which is equivalent to 73,805/(5090-408) = $15.76/share
P1 = $180.98
g = 2%
Expected Div2 = Div1*1.02 = $15.76*1.02 = $16.08
The required rate for year 2
r2 = Div2/P1+g = 16.08/180.98+0.02 = 0.1088 = 10.88%
Year 2
P2 = P1*(1+r2) = 180.98*(1+0.1088) = $200.68
Total dividend payment expected to grow ar 2%, So
73,805*1.02 = 75,281= amount used for repurchase
Hence number of shares repurchaes
73,805/200.68 = 375 shares
Number of shares oustanding = 4,682-375= 4,307 shares
DIV2 = 73,805/4,463 = $17.14