WX Company has earnings of $7.20 per share in 2019. It has decided to distribute, as dividends, 25% of its earnings. Analysts forecast that WX would earn a return on equity of 14% on its investments. If investors require a 13% rate of return,

1.1 Calculate the actual growth rate. What is the value of WX at the end of 2019? Explain.

1.2. What fraction of WX's value comes from growth opportunities?

1.3. Draw a table showing earnings per share, dividends, plowback, growth and price for no growth and growth scenarios.

2. Suppose that WX could only earn 9% on its investments and its payout ratio is now 45%,

2.1 Calculate the actual growth rate. What is the value of WX at the end of 2019?

2.2. What fraction of WX's value comes from growth opportunities?

2.3. Draw a table showing EPS, dividends, plowback, growth, and price for no growth and growth scenarios.

3. Based on the results obtained, provide a discussion on the relationship between the WX's equity value and its reinvestment policy.