Consider a firm called T&T Corporation, whose earnings per share are $15. Assuming the market capitalization rate is 18% per year. Which of the following investment strategies will result in the highest stock price?
A.
reinvests 60% of its earnings each year into new investments that yield a rate of return of 18% per year
B.
reinvests 80% of its earnings each year into new investments that yield a rate of return of 18% per year
C.
reinvests 20% of its earnings each year into new investments that yield a rate of return of 20% per year
D.
reinvests 40% of its earnings each year into new investments that yield a rate of return of 20% per year