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ART has come out with a new and improved product. As a result, the firm projects an ROE of25%, and it will maintain a plowback ratio of 0.20. Its earnings this year will be $3 per share.Investors expect
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ART has come out with a new and improved product. As a result, the firm projects an ROE of25%, and it will maintain a plowback ratio of 0.20. Its earnings this year will be $3 per share.Investors expect a 12% rate of return on the stock.68. At what price would you expect ART to sell?A. $25.00B. $34.29C. $42.86D. $45.67B. $34.29

User Gustavo Pagani
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Even Better Products has come out with a new and improved product. As a result, the firm projects an ROEof 20%, and it will maintain a plowback ratio of 0.30. Its projected earnings are $2 per share. Investorsexpect a 10% rate of return on the stock.a.At what price and P/E ratio would you expect the firm to sell? (Do not round intermediatecalculations. Round your answers to 2 decimal places.)Price$ 35.00 ± 0.05P/E ratio17.50 ± 0.05b.What is the present value of growth opportunities? (Do not round intermediate calculations. Roundyour answer to 2 decimal places.)PVGO$ 15.00 ± 0.05c.What would be the P/E ratio and the present value of growth opportunities if the firm planned to reinvestonly 25% of its earnings? (Do not round intermediate calculations. Round your answers to 2

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