A firm retains 50% of its earrings and invest in a project with ROE 10%. The market capitalization rate is 15%. The expected year end dividend is $2.5 per share Earning per share is $5. Calculate the intrinsic value of the stock What happens to the stock price when all of the earnings are paid to stockholders in the form of dividends, and nothing is retained? Suppose there is a project that has a ROE of 20%. Is it worth investing in the project? (Note: Consider impact of the changes in the stock price.)