If the firm decides to pay out 75 50 or 25 of earnings and


Bent CO. at the end of the year will have EPS of $5 and if the firm has a cost of capital of 12%:

A) If the firm decides to pay out all earning as dividends what would todays firm value be?

B) IF the firm decides to pay out 75%, 50%, or 25% of earnings and the firms return on investment is 15% what firm value will the company have?

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Finance Basics: If the firm decides to pay out 75 50 or 25 of earnings and
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