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A FICO score is not an indicator that you are ________ with money
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- Firm AAA's earnings and dividends are expected to grow by a rate of 0.03 a year. This growth will stop after year 4. In year 5 and later, it will pay out all earnings as dividends. Assume next year's dividend is 3, the cost of capital is 0.14, and next year's EPS is 9. What is AAA's stock price today?
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- Which of the following statements regarding profitable and unprofitable growth is FALSE?If a firm wants to increase its share price, it must cut its dividend and re-invest more of its earningsIf the firm retains more earnings, it will be able to pay out less of those earnings, which means that the firm will have to reduce its dividend.A firm can increase its growth rate by retaining (and reinvesting) more of its earnings.Cutting the firm's dividend to increase investment will raise the stock price if, and only if, the new investments have positive NPV.