Can you help show how you solve this problem Currently, the market projects that HG Inc will have earnings and dividends in the coming year given by EPS 1 $3 00 Div 1 $1 50 Given these projections, the expected return on equity for HG Inc is r E 7 5 and price per share P 0 $46 15 You advise HG inc to cut its dividend to Div 1 $1 00 Assuming the expected return on equity r E and the return on investment r ROI remain unchanged under this new policy, the new price per share for HG stock is closest to a $54 55 b $30 77 c $75 25 d $81 82

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Question: Can you help show how you solve this problem? Currently, the market projects that HG Inc will have earnings and dividends in the coming year

Can you help show how you solve this problem?

Currently, the market projects that HG Inc will have earnings and dividends in the coming year given by

EPS₁= $3.00
Div₁= $1.50

Given these projections, the expected return on equity for HG Inc is r_E= 7.5% and price per share P₀= $46.15.

You advise HG inc to cut its dividend to Div₁=$1.00.Assuming the expected return on equity r_Eand the return on investment r_ROIremain unchanged under this new policy, the new price per share for HG stock is closest to

a.$54.55

b.$30.77

c.$75.25

d.$81.82

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