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3. (30 Points) A company has a plowback ratio of 0.5 and the required rate of return on their stocks is 12%. Currently their stock

3. (30 Points) A company has a plowback ratio of 0.5 and the required rate of return on their stocks is 12%. Currently their stock has an intrinsic value of $42. If the company were to lower their plow back ratio to 0.4, the price of their stock would be expected to rise to $45.

What are the companys ROE and EPS?

If the company decided to have a dividend payout ratio of 100%, what would be the stock price?

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