Asim and Patricia Ghosh have purchased 4,000 shares in LAXAIR, which sells for $42 per share and pays a yearly dividend of $2.25. The firm has not grown for many years and, consequently has paid the same dividend for the past decade. This year, LAXAIR cut its dividend to $0.50 per share, but used the retained earnings to begin growing at a 7% rate. Ignoring transaction costs and taxes, how many shares will Asim and Patricia have to sell in order to maintain their income level?

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The Answer of Asim and Patricia Ghosh have purchased 4,000 shares in LAXAIR, which sells for $42 per share and pays a yearly dividend of $2.25. The firm has not grown for many years and, consequently has paid the same dividend for the past decade. This year, LAXAIR cut its dividend to $0.50 per share, but used the retained earnings to begin growing at a 7% rate. Ignoring transaction costs and taxes, how many shares will Asim and Patricia have to sell in order to maintain their income level?

Asim and Patricia Ghosh Have Purchased 4,000 Shares in LAXAIR