Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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True Corporation is forecasting to pay a $7.00 dividend next year, which represents 100% of its earnings. This will provide investors with a 12% expected return. Instead, True Corporation decides to plow back 20% of the earnings at the firm’s current return on equity of 15%. What is the value of the stock before and after the plowback decision?

Please show excel tables and formulas 

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