Emiles company has existing assets that generate an EPS of $4. If Emile does not invest except to maintain existing assets, EPS is expected to remain constant at $4 a year. However, starting next year (end of this year), Emile has the chance to invest $2.5 per share a year in developing a newly technology. Each investment is expected to generate a permanent 18% return. Note: Assume that this return is not compounded. So each year Emile gets 2.5 .18. The technology will be fully developed by the end of the fifth year.

What will be the stock price and PE ratio assuming that investors require a 12% rate of return?