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Bio-Tech Specialty has historically generated a return on equity of 16% on its investment projects. Given the risk associated with some of the new
Bio-Tech Specialty has historically generated a return on equity of 16% on its investment projects. Given the risk associated with some of the new product development, market players are expected to demand a return of 15% on the stock. The firm has decided to maintain a plowback ratio of 30% for the coming year. Earnings for the current year are projected at $4.00. A. the stock should sell at a price of $ 1 Select | [Select] and a P/E ratio of B. the present value of growth opportunities in this scenario is $ [Select] I C. if Bio-Tech decides to re-invest only 20% of its earnings, the P/E ratio will be [Select] and the PVGO will be $ [Select] D. As an equity analyst who closely follows this Tech company, you would suggest that the Board Select] its dividend payout ratio.
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