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A firm with 500,000 shares outstanding earns $2 per share and pays out 40% of its earnings as dividends. a)By how much will the firm's

A firm with 500,000 shares outstanding earns $2 per share and pays out 40% of its earnings as dividends.

a)By how much will the firm's retained earnings increase?

b)Assuming that it follows a residual dividend policy (and raises no new capital) how much does it invest?

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