Grott and Perrin, Inc. has expected earnings of $$2\mathrm{.}50$ per share for next year. The firm's

ROE is $14\%$ and its earnings retention ratio is $80\%.$ If the firm's market capitalization

rate is $12\%,$ what is the present value of its growth opportunities $($PVGO$)?($Hint: PVGO

$=$ intrinsic value of stock with dividend growth $-$ intrinsic value of stock without

dividend growth.$)$

A$)$ $$58\mathrm{.}14$

B$)$ $$58\mathrm{.}21$

C$)$ $$58\mathrm{.}33$

D$)$ $$58\mathrm{.}46$

A firm has a return on equity of $25\%$ and an earnings retention rate of $50\%.$ Its

sustainable earnings growth rate is

$\%.($Hint: Assume the firm has a constant

dividend payout policy, so that its earnings growth rate is equal to its dividend growth

rate.$)$

A$)12$

B$)12\mathrm{.}5$

C$)13$