Investors have invested $25,000 in common equity in a company.Given the risk inherent in the company,the investors expect to earn a 15 percent return.In addition,the investors expect the company to return all income to investors in the form of dividends.The company earns $4,000 the first year.For this company determine the following:
a.The company's required earnings
b.The company's residual earnings

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The Answer of Investors have invested $25,000 in common equity in a company.Given the risk inherent in the company,the investors expect to earn a 15 percent return.In addition,the investors expect the company to return all income to investors in the form of dividends.The company earns $4,000 the first year.For this company determine the following:
a.The company's required earnings
b.The company's residual earnings

Investors Have Invested $25,000 in Common Equity in a Company