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Garmin company forecasts to pay a $20.00 dividend next year, which represents 100% of its earnings. This will provide investors with a 13% expected return.
Garmin company forecasts to pay a $20.00 dividend next year, which represents 100% of its earnings. This will provide investors with a 13% expected return. Instead, we decide to plow back 40% of the earnings at the firm's current return on equity of 10%. What is the value of the stock before and after the plow back decision?
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