37.Dean Brothers Inc. recently reported net income of $1,500,000. The company has 300,000 shares of common stock, and it currently trades at $60 a share. The company continues to expand and anticipates that one year from now its net income will be $2,500,000. Over the next year the company also anticipates issuing an additional 100,000 shares of stock, so that one year from now the company will have 400,000 shares of common stock. Assuming the company's price/earnings ratio remains at its current level, what will be the company's stock price one year from now? a. $55 b. $60 c. $70 d. $75 38.Southeast Packaging's ROE last year was only 5 percent, but its management has developed a new operating plan designed to improve things. The new plan calls for a total debt ratio of 60 percent, which will result in interest charges of $8,000 per year. Management projects an EBIT of $26,000 on sales of $240,000, and it expects to have a total assets turnover ratio of 2.0. Under these conditions, the average tax rate will be 40 percent. If the changes are made, what return on equity will Southeast earn? a. 9.00% b. 11.25% c. 17.50% d. 22.5% 40.A firm has a debt/equity ratio of 50 percent. Currently, it has interest expense of $500,000 on $5,000,000 of total debt outstanding. Its tax rate is 40 percent. If the firm's ROA is 6 percent, by how many percentage points is the firm's ROE greater than its ROA? a. 0.0% b. 3.0% c. 5.2% d. 7.4%