Problem 8-01 The Baron Basketball Company (BBC) earned $9 a share last year and paid a dividend of $7 a share. Next year, you expect BBC to earn $11 and continue its payout ratio. Assume that you expect to sell the stock for $137 a year from now. Do not round intermediate calculations. Round your answers to the nearest cent. a. If you require 12 percent on this stock, how much would you be willing to pay for it? $ b. If you expect a selling price of $112 and require an 8 percent return on this investment, how much would you pay for the BBC stock? $ eBook Check My Work Problem 8-02 The Clipper Sailboat Company is expected to earn $2 per share next year. The company will have a return on equity of 17 percent and the company will grow 5 percent in the future. The company has a cost of equity of 15 percent. Given that information, answer the following questions. a. What is the value of the company's stock? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. What is the present value of the growth opportunity? Do not round intermediate calculations. Round your answer to the nearest cent. c. Assume that the growth rate is only 4 percent. What would the appropriate P/E multiple be for this stock? Do not round intermediate calculations. Round your answer to two decimal places.