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What will be the share price after the announcement

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Soylent Corp expects earnings this year (at t=1) of $6.99 per share. It currently has a share price of $49.9. The firm pays 38.0% of earnings in dividends and reinvests 62.0% of earnings in new projects. Reinvested earnings provide a return on new investment of 15.1%. However, due to a disappearing customer base, Soylent Corp will soon announce that the firm will begin paying out 62.0% of all earnings as dividends, retaining 38.0% for investment in new projects.

Problem 1: What will be the share price after this announcement? Investors are not expecting the firm to change its payout policy. (Round to the nearest cent.)

Reference no: EM132665781

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