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XYZ Corporation does not currently pay cash dividends and is not expected to for the next five years. Its latest EPS was $10, all of
XYZ Corporation does not currently pay cash dividends and is not expected to for the next five years. Its latest EPS was $10, all of which was reinvested in the company. The firms expected ROE for the next five years is 20% per year, and during this time it is expected to continue to reinvest all of its earnings. Starting in year 6, the firms ROE on new investments is expected to fall to 15%, and the company is expected to start paying out 40% of its earnings in cash dividends, which it will continue to do forever after. XYZs market capitalization rate is 15% per year. Please answer the following questions: 1)(15 points) Project the earnings and dividends for
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