Hopefully you've had some time and remember the nice thing about you pausing, taking a break is, you take as much time as you want. Welcome back and let's do this. This is pretty straightforward. So I know my ROI Is equal to 10%. I know my r is equal to 12%. What do I know about planning to grow is not planning to grow? What does that tell me? It tells me that g is 0. Remember, could g suddenly be positive because of no intent of mine? I'm not interested in that. Because that by definition is not planned. And now I'm talking about planning in a company. So the question is, what is Po without any growth? Po is DIV over r. But the good news is, it is also EPS over r. What in this formula do I know and what I don't know? I do know this is 12%. I have to figure this out. What is it? Let's do it in our head. Remember, what you need for cash flow to happen? You need Invested Capital. How much is it? $60 and then that capital has to earn some money. Do you know how much your rate of return is on the capital? Yes. .1. So how much is this? $6. By the way, in real life, getting $6 a share is unusual as a Dividend. But this is just for the numbers here are not that important. So 6 divided by .12 is what? Exactly 50 bucks. I hope you recognize that I haven't done anything profound. I'm using common sense and Perpetuities to value stocks. Common sense good. Cash flows needs what? A return, put some investment, it's both shared and I need what my opportunity cost of capital is for someone to be able to evaluate Microsoft. In fact, if Microsoft's own internal evaluations don't match what investors do, the IPO is not going to happen easily. [INAUDIBLE], right. You know this. You go a roadshow, you tell people this is what my evaluation is, people agree with you, disagree and that back and forth is the art of that. Okay, so let's move now to a little bit more complicated stuff and I'm going to let you, again, think about. Suppose Microsoft today realizes that this No-Growth Policy is not good and announces an exciting Growth Policy that allows back 70% of its earnings every year at the same ROI as its existing assets. Okay, so plow back is what? We talked about it, reinvest its RE, Retained Earnings, it's also called plowing back. So just some more jargon. And for simplicity, let me just write it here so that you remember. Plowing back is the same thing as Retained Earnings. And what is the intent of plowing back? To grow by doing good things. Okay, so the first question is what Growth Rate will this policy generate? The second question is what will happen to Microsoft's share price? So imagine Microsoft had already been accepted and was going along, what was its share price without growth? We just did it. It was what, six bucks was the earnings it would get forever, decides to pay it all out without the growth, divided by 12%. It's 50 bucks. What growth rate will this new policy generate? So imagine now Microsoft is there trading roughly at 50, jumping up and down a little bit because of what's happening to the real world. What will happen to Microsoft shared price is the more important question. So let's think through this a little bit. Which is the easier question? I think the easier question is the growth rate, right? Why? Because let's do that piece together. What would be the growth rate? Growth rate requires two components. B is the reinvestment rate. What fraction of your money are you putting back? And then you need some return on the investment. Do we notice two numbers? I'm going to do this simply. Do we know these two numbers? The answer is yes. We know that b is .7, and we know the existing assets have been paying us 10%, so .1. So the growth rate is 7%. By the way, this growth rate is a phenomenal growth rate, okay. So let me ask you the next question and I'm sorry, I'm going to take a break sooner than I usually do. And the reason I'm saying sorry is simply because I know it interrupts the flow but remember, we have done the concept, the reason I'm taking a break, is this is a pretty profound point. And I want you to figure it out. Spend five minutes, ten minutes, twenty, whatever it takes. Figure out what will happen to Microsoft in shared price. I encourage you to do the following, try not to write. Try not to. Go back and think about what's going on. And directionally be able to tell me, price goes up or price goes down. And we, together, will then see how exactly what will happen. Now that exact price is an approximation, right? So a bunch of presumptions. I want you to figure this out. I'm going to take an early break but by design, okay? Good.