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n.com/ext/map/indechtml?con con&external browser and 1052152 weet meditationem apter 18 Dividend Policy and Retained Earnings Help...

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n.com/ext/map/indechtml?con con&external browser and 1052152 weet meditationem apter 18 Dividend Policy and Retained Earnings Help Save Sub You received partial credit in the previous attempt 1 Check my woch View previous The Adams Corporation has earnings of $966,500 with 350,000 shares outstanding. Its P/E ratio is 14. The firm is holding $440,000 funds to invest or pay out in dividends. If the funds are retained the aftertax return on investment will be 15 percent, and thus will add to present earnings. The 15 percent is the normal return anticipated for the corporation, and the P/E ratio would remain unchanged the funds are paid out in the form of dividends, the P/E ratio will increase by 10 percent, because the shareholders in this corporation have a preference for dividends over retained earnings a. Compute the price of the stock under the two plans. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) Price of stock Retention plan $ 4130 Payout plan $ 42.53 aces b. Which plan will maximize the market value of the stock? Payout plan O Retention plan PINY 1 of 3 !!! Next > 9 TOSHIBA

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