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What is the value of the company

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At t=O company X has a book value of equity equal to 100. The cost of equity is 15%. The ROE from 0 to 1 is 25% and the ROE from 1 to 2 is 20%. Beyond that, the ROE is always 15%. At t=1 and t=2, the company pays out all earnings as dividends. For t=3 to t=7, the company pays out 30% of earnings as dividends and reinvests the rest into the company. For t = 8 to infinity, the company pays out 60% of earnings as dividends and reinvests the rest into the company. What is the value of the company at t = 0? You may assume the company has no debt or other assets/liabilities.

Reference no: EM133002562

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