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What is the growth rate that should be achieved

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Problem 1: Balboa Inc. pays out all its earnings as dividends and has a share price of $22.00. In order to expand, Balboa announces it will cut its dividend payments from $2.00 to $1.70 per share and reinvest the retained funds. What is the growth rate that should be achieved on the reinvested funds to keep the equity cost of capital unchanged?

Reference no: EM132965255

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