Even Better Products has come out with an even better product. As a result, the firm projects an ROE of 30%, and it will maintain a plowback ratio of 0.30. Its earnings this year will be $2 per share. Investors expect a 16% rate of return on the stock.

Required: A. At what price and P/E ratio would you expect the firm to sell? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Price?

P/E Ratio?

B. What is the present value of growth opportunities? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

PVGO?

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? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

P/E ratio?

PVGO?