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A company forecasts to pay a 3.00 dividend next year, which represents 100% of its earnings. This will provide investors with a 10% expected return.

A company forecasts to pay a 3.00 dividend next year, which

represents 100% of its earnings. This will provide investors

with a 10% expected return. Instead, we decide to plow back

30% of the earnings at the firms current return on equity of

15%. What is the value of the stock before and after the

plowback decision?

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