6. ART has come out with a new and improved product. As a result, the firm projects an ROE of 25%, and it will maintain a plowback ratio of 0.20. Its earnings this coming year will be $3 per share. Investors expect a 12% rate of return on the stock. At what price would you . expect ART to sell? A. $25 B. $34.29 C. $42.86 D. $45.67 7. A firm reports EBIT of $100 million. The income statement shows depreciation of $20 million. If the tax rate is 35% and total capital expenditures and increases in working capital total $10 million, what is the free cash flow to the firm? A. $57 B. $65 C. $75 D. $95 8. Next year's earnings are estimated to be $5. The company plans to reinvest 20% of its earnings at 15%. If the cost of equity is 9%, what is the present value of growth opportunities? A. $9.09 B. S10.10 C. $11.11 D. $1221 9. The risk-free rate of return is 9,0%, the expected rate of return on the market portfolio is 19%, and the stock of Xyrong Corporation has a beta coefficient of 2.5. Xyrong pays out 60% of its earnings in dividends, and the latest earnings announced were $30 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 25% per year on all reinvested earnings forever. a. What is the intrinsic value of a share of Xyrong stock? b. If the market price of a share is currently $81, and you expect the market price to be equal to the intrinsic value one year from now, calculate the price of the share after one year from now c. What is your expected one-year holding period retum on Xyrong stock