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At the end of the year a firm will have $100M of earnings for equity holders and 200M shares outstanding. This is expected to grow
At the end of the year a firm will have $100M of earnings for equity holders and 200M shares outstanding. This is expected to grow at 3% a year each year, and the P/E ratio is 15. Personal income tax rate is 35%, and capital gains tax is 20%.What are the investors after-tax returns in one year if
A. Payout as dividend - An investor owns 50 shares and plans to hold on to her shares
B. Payout as repurchase - If the investor holds on to her shares
C. Payout as repurchase - If the investor sells all of her shares after the buyback
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