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Ting's company has existing assets that generate Earnings Per Share EPS of $8. If Ting does not invest except to maintain existing assets, EPS is
Ting's company has existing assets that generate Earnings Per Share EPS of $8. If Ting does not invest except to maintain existing assets, EPS is expected to remain constant at $8 a year. However, starting next year, Ting has an opportunity to invest $2 per share a year in developing a new technology. Each investment done at the start of the year is expected to generate a 30% return at the end of the year. The technology requires 3 years of investment and total earnings of the company at the end of the period will remain constant thereafter. [Today is time 0 and start working at time 1] What is the growth of earnings in time 3 with respect to time 1? Select one: O 15% O 7.5% O 5.5% O 30%
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