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2. GL Corporation, a retail firm, is making a decision on how much it should pay out to its stockholders. It has $100 million in
2. GL Corporation, a retail firm, is making a decision on how much it should pay out to its stockholders. It has $100 million in investible funds. The following information is provided about the firm: (a) It has 100 million shares outstanding, each share selling for $15. The beta of the stock is 1.25 and the riskfree rate is 8%. The expected return on the market is 16%. (b) The firm has $ 500 million of debt outstanding. The marginal interest rate on the debt is 12%. tp /people stem.nyu.edu/adamodar/New_Home_Page/problems/divfr.htm 1/7
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