Question
5.value: 30.00 points Web Cites Research projects a rate of return of 20% on new projects. Management plans to plow back 30% of all earnings
5.value: 30.00 points Web Cites Research projects a rate of return of 20% on new projects. Management plans to plow back 30% of all earnings into the firm. Earnings this year will be $4 per share, and investors expect a 10% rate of return on stocks facing the same risks as Web Cites. a. What is the sustainable growth rate? (Round your answer to 2 decimal places.) Sustainable growth rate % b. What is the stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock price $ c. What is the present value of growth opportunities (PVGO)? (Round your answer to 2 decimal places.) PVGO $ d. What is the P/E ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places.) P/E ratio e. What would the price and P/E ratio be if the firm paid out all earnings as dividends? (Round your answer to 2 decimal places.) Price $ P/E ratio
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