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ClapTrap is a rapidly growing image messaging company. The company's growth strategy requires rapid reinvestment currently, with dividend payouts increasing as growth opportunities gradually disappear.
ClapTrap is a rapidly growing image messaging company. The company's growth strategy requires rapid reinvestment currently, with dividend payouts increasing as growth opportunities gradually disappear. You have the following financial information: Earnings in the most recently concluded fiscal year were $6.98, which the company 100% retained and reinvested in new projects at time 0 with a return on new investment of 41.0% in year 1. At the end of year 1, the company will retain 89.0% of its earnings. Return on new investment is expected to be 31.0% in year 2. In the following year (t=2), the company will retain 69.0% of its earnings with an expected return on new investment of 17.0% in year 3. The company will then enter a period of stable growth (t=3), retaining 49.0% of its earnings in perpetuity. What are the expected dividends per share for each period from t=1 to t=3 ? (Round up to four decimal places) A) The expected dividends per share for t=1 is $ (Round up to four decimal places) B) The expected dividends per share for t=2 is $ (Round up to four decimal places) C) The expected dividends per share for t=3 is $ (Round up to four decimal places)
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