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Shatin Intl. has 1010 millionshares, an equity cost of capital 13%, and is expected to pay a total dividend of $20 million each year forever.

Shatin Intl. has 1010 millionshares, an equity cost of capital 13%, and is expected to pay a total dividend of $20 million each year forever. It announces that it will increase its payout to shareholders. Instead of increasing itsdividend, it will keep it constant and will start repurchasing $10million of stock each year as well. How much will its stock priceincrease?

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