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

Essay

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?