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ABC Company's earnings per share are expected to be $ 4 . 0 0 at t = 1 . Currently , ABC Corp. pays out

ABC Company's earnings per share are expected to be $4.00at t =1.Currently, ABC Corp. pays out all its earnings as dividends and has a current share price of $40.In order to expand, ABC decides to cut its dividend from $4.00to $2.00per share and reinvest the retained funds. With the new expansion, ABC's dividends are expected to grow at 6%per year indefinitely. If the reinvestment does not affect ABC's equity cost of capital, what should the share price be as a consequence of this decision?

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