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Homework answers / question archive / Soylent Corp expects earnings this year (at t=11) of $$6
Soylent Corp expects earnings this year (at t=11) of $$6.416.41 per share. It currently has a share price of $$49.9449.94. The firm pays 32.032.0% of earnings in dividends and reinvests 68.068.0% of earnings in new projects. Reinvested earnings provide a return on new investment of 15.415.4%. However, due to a disappearing customer base, Soylent Corp will soon announce that the firm will begin paying out 61.061.0% of all earnings as dividends, retaining 39.039.0% for investment in new projects. What will be the share price after this announcement? Investors are not expecting the firm to change its payout policy.
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