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C. Question #4 (14) XYZ Corporation's shares trade for $32.98 each. XYZ typically reinvests 20%...

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C. Question #4 (14) XYZ Corporation's shares trade for $32.98 each. XYZ typically reinvests 20% of its earnings. These re- investments get a rate of return of 24%. Shares of XYZ have a market capitalization rate of 12.2%. a. What is the coming year's earnings per share? [4] b. What is the dividend expected to be in one year? [2] What amount of the share price is attributed to future growth (NPVGO)? [4] d. XYZ's R&D team is good at finding high return projects. These prime projects, which are the best the R&D team has found, have an ROE of 24%. The R&D team has also found other projects to invest in. However, these projects aren't as good, only having an ROE of 18%. What would the share price be if the firm re-invested an extra 10% of its earning into these lower quality projects? (The first 20% of earnings re-invested will still be invested in projects yielding 24%). [4]

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