Question

Alphabet (GOOGL) has yet to pay a dividend, but in spring 2022 it announced it would repurchase $73 billion worth of shares over the year. If the amount spent on share repurchases were expected to grow by 3.9% per year, and Alphabet's equity cost of capital is 8.6%, estimate Alphabet's market capitalization. If Alphabet has 661 million shares outstanding, what stock price does this correspond to? The share price is $ (Round to the nearest cent.)

Name: alphabet googl has yet to pay a dividend but in spring 2022 it announced it would repurchase 73 billion worth of shares over the year if the amount spent on share repurchases were expected t 95354
Uploaded: 2023-07-10T21:37:59-08:00
Duration: 3 min 54 s
Channel: Supreeta N
Description: alphabet googl has yet to pay a dividend but in spring 2022 it announced it would repurchase 73 billion worth of shares over the year if the amount spent on share repurchases were expected t 95354

          Alphabet (GOOGL) has yet to pay a dividend, but in spring 2022 it announced it would repurchase $73 billion worth of shares over the year. If the amount spent on share repurchases were expected to grow by 3.9% per year, and Alphabet's equity cost of capital is 8.6%, estimate Alphabet's market capitalization. If Alphabet has 661 million shares outstanding, what stock price does this correspond to?

The share price is $ (Round to the nearest cent.)

alphabet googl has yet to pay a dividend but in spring 2022 it announced it would repurchase 73 billion worth of shares over the year if the amount spent on share repurchases were expected t 95354

Added by Debra H.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Supreeta N

07/10/2023

Step 1

We can use the Gordon Growth Model (also known as the Dividend Discount Model for growing dividends) for share repurchases. The formula for the present value of growing perpetuities is: $$PV = \frac{CF_1}{r - g}$$ Where: $CF_1$ = Cash flow in the next period (in Show more…

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Alphabet (GOOGL) has yet to pay a dividend, but in spring 2022 it announced it would repurchase $73 billion worth of shares over the year. If the amount spent on share repurchases were expected to grow by 3.9% per year, and Alphabet's equity cost of capital is 8.6%, estimate Alphabet's market capitalization. If Alphabet has 661 million shares outstanding, what stock price does this correspond to? The share price is $ (Round to the nearest cent.)