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ABC Corp has invested in projects with an ROE of 15% and expects an EPS of $ 5 next year. The company maintains a 60%
ABC Corp has invested in projects with an ROE of 15% and expects an EPS of $ 5 next year. The company maintains a 60% dividend ratio and the share price is currently $ 50. After a high level meeting, the company decides to change its dividend policy and invest in new projects with an ROE of 40%. As a result of implementing these decisions, the companys share price jumps to $ 100. Assuming that there has been no change in the EPS and the rate of return expected by investors remains the same, what is the new dividend ratio?
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