Next year, NPI expects net income of $16 million. It plans to reinvest 50% of its earnings and pay out the rest as dividends. Its cost of equity capital is 12%. If NPI earns a 16% rate of return on the funds reinvested, what is the growth rate and value of NPI? Hypothetically, had the firm not reinvested any of its earnings and paid out 100% of earnings as dividends, what would have been the value? How much does reinvesting contribute to firm value?

answer; risk transference;

answer///ability to capture the attention of users;

answer///parietal;

answer: in the short-run firms will respond by raising the price of turkey.

explanation: initially the long-run equilibrium is at a price of $5 per pound of turkey and a quantity of 50 million pounds per year. now, when webmd claims that a protein found in turkey will increase your expected lifespan by 4 years. the consumers demand for turkey will increase at every price shifting the demand curve to the right from d1 to d2. while, there will be no change in the supply curve in the short-run as it is not possible for producers to adjust supply so quickly. as a result the new equilibrium will occur at a higher price and a higher quantity of turkey.

thus, in the short run firms will respond by increasing the price of turkey, selling more quantity at a higher price and earning economic profits.