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 plowback ratio of $0\mathrm{.}20.$ Its

earnings this year will be $$3$ per share. Investors expect a $14\%$ 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.$)$

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 $\frac{P}{E}$ ratio and the present value of growth opportunities if the

firm planned to reinvest only $10\%$ of its earnings? $($Do not round intermediate

calculations. Round your answers to $2$ decimal places.$)$

P$/$E ratio

PVGO