Halo Corp is all equity financed and generates perpetual annual EBIT o

Halo Corp is all equity financed and generates perpetual annual EBIT of $600. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. Assume that Halo has a 100% payout rate.

Halo has 1,000 shares outstanding. The stock holders of Halo require a return of 6%. Assume that the tax rate is 0%. What is the price per share for Halo stock?
A) $15.00
B) $0.60
C) $30.00
D) $10.00
E) $4.20

ANSWER

D