Question
ART has come out with a new and improved product. As a result, the firm projects an ROE of 30%, and it will maintain a
- ART has come out with a new and improved product. As a result, the firm projects an ROE of 30%, and it will maintain a plowback ratio of 0.25. Its earnings this year will be $2 per share. Investors expect a 12% rate of return on the stock.
a)At what price would you expect ART to sell?
b) At what P/E ratio would you expect ART to sell?
c) What is the present value of growth opportunities for ART?
d) What price do you expect ART shares to sell for in 4 years?
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Mathematics For Business
Authors: Stanley A Salzman, Charles D Miller, Gary Clendenen
8th Edition
0321357434, 9780321357434
