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1. A company projects an earning of $3 per share. Management plans to plowback 30 percent of all earnings into the firm for new investment,

1. A company projects an earning of $3 per share. Management plans to plowback 30 percent of all earnings into the firm for new investment, and if they do so, the value of the stock today $35 per share. Assume the investors expect a 12 percent return on the stock. What is the rate of return on new investment for the company?

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