1. When considering firm investment prospects (in terms of the projects or acquisitions it has available to it), what do investors require in terms of ROE and required cost of equity? Relatedly, is it always in the best interest of shareholders for the firm to increase its plowback ratio? The market capitalization rate (i.e. market consensus for the firms required return on equity) for ABC Company is 10%. Its expected ROE is 12% and its expected EPS is $5. The firm's plowback ratio is 40%. What is the firms expected P/E?

2. DCF Corporation will pay a year-end dividend of $3. Thereafter, the ROE is expected to be a constant 10% and its plowback ratio is expected to be a constant 70%. The risk-free rate is currently 2%, and the expected return on the market portfolio is 8%. The stock has a beta of 0.95. What is the intrinsic value of the stock?

3. HIG Corporation expects to earn $4 per share next year. The firms ROE is 10% and its plowback ratio is 50%. The firms Beta is 0.75, the risk-free rate is 3%, and the expected return on the market is 10%. What is the firms PVGO?

4. A firm has a stock price of $50.00 per share. The firm's earnings are $60 million, and the firm has 20 million shares outstanding. The firm has an ROE of 16% and a plowback of 70%. What is the firm's PEG ratio?

5. The free cash flow to the firm is reported as $175 million. The interest expense to the firm is $15 million. If the tax rate is 35% and the net debt of the firm increased by $30 million, what is the approximate market price per share of the firm if the FCFE grows at 3% and the cost of equity is 9%? Shares outstanding is currently 100 million.