Even Better Products has come out with a new and improved product. As a result, the firm projects an ROE of30%,and it will maintain a plowbackratio of.30. Its earnings this year wi] be $3 per share. Investors txpecta 16% rate of return on the stock. (LO 13-3) a. At what price and P/E ratio would you expectthe firm to sell? b. What is the present value of growth opportunities? c. What would be the P/E ratio and the present value of growth opportunities if the firm planned to reinvest only 20% of its earnings? b=0,3 b=0,2 b=0,2 ROE Plowback ratio E1 a) g D1 PO (growing company) P/E P/E P/E b) Price non growing company PVGO Even Better Products has come out with a new and improved product. As a result, the firm projects an ROE of30%,and it will maintain a plowbackratio of.30. Its earnings this year wi] be $3 per share. Investors txpecta 16% rate of return on the stock. (LO 13-3) a. At what price and P/E ratio would you expectthe firm to sell? b. What is the present value of growth opportunities? c. What would be the P/E ratio and the present value of growth opportunities if the firm planned to reinvest only 20% of its earnings? b=0,3 b=0,2 b=0,2 ROE Plowback ratio E1 a) g D1 PO (growing company) P/E P/E P/E b) Price non growing company PVGO