Question 20 (1 point) The Kayak 'n Roll expects to earn $75,000 a year in perpetuity and to pay out all its earnings as dividends. Suppose that the firm will adopt a new investment policy where 40% of its earnings will be invested in new projects every year starting in year 1. The remaining 60% of earnings will be distributed as dividends. The new projects will earn 20% a year, and the discount rate is 15%. Assuming a tax rate of 35%, what will be the value of the firm under the new investment policy? $195,000 $325,000 S417,857 $500,000 $642,857