Problem 8-07 The current risk-free rate is 3 percent and the market risk premium is 5 percent. You are trying to value ABC company and it has an equity beta of 0.7. The company earned $2.00 per share in the year that just ended. You expect the company's earnings to grow 4 percent per year. The company has an ROE of 13 percent. a. What is the value of the 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. Problem 8-11 Assume a company has a payout ratio of 40 percent, a profit margin of 5 percent, a cost of equity of 10 percent and a growth rate of 2.0 percent. Do not round intermediate calculations. Round your answers to three decimal places. a. What is the forward price-sales multiple? b. What is the trailing price-sales multiple