Market capitalization rate-plowback and return on equity

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Reference no: EM131558777

Your firm is selling for S8O/share. Dividends have been growing at a steady rate of 8% per year, and are expected to continue to grow at this rate. The next dividend will be S5, and the next earnings-per-share $40. What are the market capitalization rate, plowback, and return on equity?

What would happen to the share price if the firm decreased its plowback, say to 75%? Why does this happen?

Reference no: EM131558777

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