Consider a company, meta Inc, with expected earnings in the coming year of 6 per share. The company could, in principle, pay out all of these earnings as dividends, maintaining a perpetual dividend flow of 6 per share.

1. If the market capitalization rate is 15%, calculate the price per share of the company.

2. After this pay-out in dividend, would this firm experience a change in its price per share, in theory

and in reality? For both cases, justify your answer.

Suppose now, meta engages in growth projects that generate a return on investment of 20%.

3. How should Meta manage its plowback ratio in order to grow the companys stock value, why?