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Suppose a mature firm decides to invest in a new project with an expected Return on Equity ( ROE ) of 1 0 % .

Suppose a mature firm decides to invest in a new project with an expected Return on Equity (ROE) of 10%. To fund this project, the firm reduces its dividend payment by 50%. The forward earnings are $10 per share, and the required rate of return is 8%. What is the present value of the growth opportunity (PVGO)? No excel, show all your work please.

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