Both firms have just announced 10 percent increases in, Finance Basics

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Both firms have just announced 10 percent increases in

Mr. Chan and Mr. Smith are the CEOs of similar textile manufacturing firms. Chan is 64 years old and plans to retire next year. Smith is 52 years old and expects to remain with the firm for some time. Both firms have just announced 10 percent increases in their earnings. Which firm should expect the greatest stock price increase? Explain.

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