Your firm is selling for S8O/share. Dividends have been growing at a steady rate of 8% per year, and are expected to continue to grow at this rate. The next dividend will be S5, and the next earnings-per-share $40. What are the market capitalization rate, plowback, and return on equity?
What would happen to the share price if the firm decreased its plowback, say to 75%? Why does this happen?