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5. Even Better Products has come out with a new and improved product. As a result, the firm projects an ROE of 20%, and it

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5. Even Better Products has come out with a new and improved product. As a result, the firm projects an ROE of 20%, and it will maintain a plowback ratio of .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? b) What is the present value of growth opportunities? c) What would be the P/E ratio and the present value of growth opportunities if the firm planned to reinvest only 20% of its earnings

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