Question
2. Even Better Products has come out with a new and improved product. As a result, the firm projects and ROE of 20%, and it
2. Even Better Products has come out with a new and improved product. As a result, the firm projects and ROE of 20%, and it will maintain a plowback ratio of 0.30. Its earnings this year will be $2 per share. Investors expect a 12% rate of return on the stock.
a. At what price and P/E ratio would you expect the firm to sell? P0 =$23.33 , P/E = 11.67
b. What is the PVGO? $6.67
c. What would be the P/E ratio and the PVGO if the firm planned to reinvest only 20% of its earnings?
THE ANSWERS TO PART A AND B ARE GIVEN. ALL I NEED IS THE ANSWER TO PART C WITH ALL WORK WITH STEPS SHOWN
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