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Even Better Products has come out with an even better product. As a result, the firm projects an ROE of 20%, and it will maintain
Even Better Products has come out with an even better product. As a result, the firm projects an ROE of 20%, and it will maintain a olowback ratio of 0.40. Its earnings this year will be $3 per share. Investors expect a 14% rate of return on the stock. Requlred: . At what price and P/E ratio would you expect the firm to sell? (Do not round Intermedlate calculetions. Round your answers to 2 decimal pleces.) Answer is complete but not entirely correct. o. What is the present value of growth opportunities? (Do not round Intermedlate calculatlons. Round your answer to 2 decimel oleces.) E. What would be the P/E ratio and the present value of growth opportunities if the firm planned to reinvest only 30% of its earnings? Do not round Intermedlate calculations. Round your answers to 2 decimal pleces.)
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