Galaxy Air,previously a No-Growth Firm,has Two Million Shares Outstanding

Multiple Choice

Galaxy Air,previously a no-growth firm,has two million shares outstanding.Until now,it consistently earned $20 million per year on its assets.(It has no debt and pays out all earnings as dividends.Its cost of capital is 10%.) Due to its newly appointed CEO,Galaxy Air is now able to squeeze out 1% annual growth by plowing back 5% of earnings.Calculate its stock price per share.

A) $200.00
B) $106.61
C) $100.00
D) $110.10