Firms A & B have no debt. Both have invested capital of $5,000,000 and 200,000 shares outstanding. Both firms have a ROIC of 12% and a WACC of 12%. Firm A pays out 100% of earnings as dividends and Firm B pays out 40% of its earnings as dividends.

What will be the share price of each firm at the end of two years?

Will shareholders of Firms A & B earn the same or different rates of return after selling their shares at end of year two assuming both firms continue to operate as they have and there are no changes in expectations. Explain your logic.