Comapny XYZ is growing at a sustainable growth rate of 4% but they are not sure if this is the best route. The Cost of equity is 13%, ROE is 8%, and EPS is 8.
a) Find the payout rate, reinvestment rate, dividend, and stock value for a growth rate of 6%, 4%, and 0%.
b) What is their value in growth ($) if they kept growing at 4% per year?
Please show work and explain.