0. (205) Web Cites Research projects a rate of return of 15 percent on new projects. Management plans to plow back 30 percent of all earnings into the firm. Earnings this year will be $2 per share, and investors expect a 10 percent rate of return on the stock. (1). (45) What are the growth rate, stock price, P/E ratio and the present value of growth opportunities? (2). (25 ) What would the price and P/E ratio be if the firm paid out all earnings as dividends? (3). (2 ) What do you conclude about the relationship between growth opportunities and P/E ratios? (4). (2 ) Now suppose that Web Cites Research projects a rate of return of 10% on new projects, earnings this year will be $2 per share, and investors expect a 10 percent rate of return on the stock. Find the price and P/E ratio in these circumstances. Assume a 70% payout ratio. (5). (3 ) Please compare (2) and (4). Explain it. (6). (3 ) Now suppose that instead of plowing money back into investment projects, Web Cites Research's management is investing at an expected return on equity of 8 percent. Find the growth rate of dividends and earnings, the price and P/E ratio in these circumstances. Assume a 70% payout ratio. (7). (4) Find the new value of its investment opportunities. Explain why this value is negative despite the positive growth rate of earnings and dividends. If you were a corporate raider, would Web Cites Research be a good candidate for an attempted takeover? Why