Joe Plumbing Can Currently Generate Eps Of 3 Per Year Forever By Just Maintainin

Joe Plumbing can currently generate EPS of 3 per year forever by just maintaining current operations. Shareholders need to earn 15%. Joe pays all the EPS as a dividend. Joe has found a machine for sale that should earn a 16% return on investment. He hesitates to buy it, because he would have to retain 50% of the EPS to buy and run it, thus cutting his dividend. Calculate (and show) the numbers that can help Joe decide what he should do, then tell him

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