ABC stock has an expected ROE of 12% per year, expected earnings per share of $2, and expected dividends of

$1.50 per share. Its market capitalization rate is 10% per year.

a. What are its expected growth rate, its price, and its P/E ratio?

b. If the plowback ratio were .4, what would be the expected dividend per share, the growth rate, price, and the P/E ratio? P-69