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ART has come out with a new and improved product. As a result, the firm projects an ROE of 2 0 % , and it

ART 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

10 % .

Investors require a

14 %

rate of return on the stock. At what P

/

E ratio would you expect ART to sell? Round your answer to one decimal place.

Your Answer:

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