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Firm A currently has earnings per share of $10. It bas no growth and pays out all earnings as dividends. So it is a cash

Firm A currently has earnings per share of $10. It bas no growth and pays out all earnings as dividends. So it is a cash cow now. There is a new project that will require an investment of $2 per share in one year. The project is only a two-year project, and it will increase earnings in the two years following the investment firm A's stock. by $3 and $4, respectively. Investors require a return of 10% on firm A's stock, a) What is the value per share of the firm's stock assuming the fim does not undertake the investment opportunity? b) If the firm does undertake the investment, what is the value per share now? c) Again, assume the tirm undertakes the investment. What will tlie price per share be five ycars from today? Explain.

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