Retention ratio is increased

Reference no: EM13891445

X corp predicts EPS of 2 for the coming year, and currently retains 50% of earnings. It has ROE 15%, and the the stock is currently trading at 28 dollar per share. In the long run, what will happen to the price of the stock, if its retention ratio is increased to 60%?

a. 13.3

b. 20.42

c. 12.57

d. 38.64

Reference no: EM13891445

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