2.

(Market value ratios) Garret Industries has a pricelearnings ratio of 18.81X. a. If Garret's earnings per share is $1.85, what is the price per share of Garret's stock? b. Using the price per share you found in part a, determine the price/book ratio if Garret's equity book value per share is $9.88. a. The price per share of Garret's stock is $ (Round to the nearest cent.) b. Garret's price/book ratio is X. (Round to two decimal places.) (Interest rate determination) If the 10-year Treasury bond rate is 4.9%, the inflation premium is 1.8%, and the maturity-risk premium on 10-year Treasury bonds is 0.5%, assuming that there is no liquidity-risk premium on these bonds, what is the real risk-free interest rate? The real risk-free interest rate is %. (Round to one decimal place.)