Large Oil Co$.$ pays out all of its earnings, $$5$ per share, to investors.

What is the value of the stock if the required rate of return us $12\%?$

Suppose the company$$s management is now investing at an expected return on equity of $10\%,$ which is below the return of $12\%$ that investors could be expected to get from comparative securities$.$ Assume a $60\%$ payout ratio, find the sustainable growth rate dividends and earnings in these circumstances.

Fine the new value of its investment opportunities. Explain why this value is negative despite the positive growth rate of earnings and dividends.

If you were a corporate raider, would the company be a good candidate for an attempted takeover?