Question: A firm with return on equity 2 0 % and beta 0 . 9 just distributed all its earnings ( $ 1 2 per share

A firm with return on equity 20% and beta 0.9 just distributed all its earnings ($12 per share) as dividends. The expected market return is 15% and the risk-free rate is 5%. The firm can keep distributing all its earnings to shareholders each year or retain 25% for reinvestment.
What is the price of the stock if the firm decides to retain 25% of its earnings each year moving forward?

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