A)Jovany Wholesale company has an expected ROE of 12%, and an expected EPS of $5 after 1 year. Assume that the market capitalization rate is 10% and the plowback ratio is 60%, what will be its P/E ratio? *

6 points

a. 15.31

b. 13.33

c. 13.96

d. 14.29

e. None of the above

B)You want to purchase Elle & Co. stock and hold it for 1 year. You expect to receive $3.5 in dividends. Also, you expect to sell Elle & Co. stock for $65 at the end of the year. If you want to earn 12% rate of return, what is the maximum price that you would pay for a share of Elle & Co. today? *

3 points

a. $54.91

b. $570.83

c. $61.16

d. $69.89

e. None of the above

C)The expected earnings of Glaxo Inc. are $1.5 per share. These earnings are expected to grow at 5%. The market capitalization rate is 8%. Assume that the firms dividend payout ratio is 60%, by how much does Glaxos ROE exceed the market capitalization rate? *

3 points

a. 0.33%

b. 2.59%

c. 4.50%

d. 5.12%

e. None of the above