10. The stock of Amigo Corp. is currently selling for $10 per share. Earnings per share in the coming year are expected to be $2. The company has a policy of paying out 50% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 20% rate of return per year. This situation is expected to continue indefinitely.

1. If Amigo were to cut its dividend payout ratio to 25%, what would happen to the stock price?What if Amigo eliminated the dividend?