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XYZ company is expected to generate earnings per share (EPS) of S$4.80 in the upcoming year. At present, the company has not identified any profitable
XYZ company is expected to generate earnings per share ("EPS") of S$4.80 in the upcoming year. At present, the company has not identified any profitable investment opportunities so it decides to pay out all earnings as dividends. Based on this analysis, XYZ is currently trading at S$25.55 per share. However, a new CFO is hired and they can source profitable opportunities for the company to pursue. They believe that another bakery can be set-up in SK which will deliver a return of 14.5%. However, in order to fund this XYZ company will have to retain earnings of 40%. By deciding to invest in the new bakery, what effect would this have on XYZ's share price?
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