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A nogrowth firm has two million shares outstanding, no debt and pays out all earnings as dividends. Until now, it consistently earned $20 million per

A nogrowth firm has two million shares outstanding, no debt and pays out all earnings as dividends. Until now, it consistently earned $20 million per year on its assets. Its cost of capital is 10%. a. Calculate its stock price share. b. As a result of a change in financial policy, assume the company is now able to squeeze out 1% annual growth by plowing back 5% of earnings. Calculate its new stock price per share

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