1. Question 62

   1 Point

   The following data applies to the next 4 questions.

   Now it is Jan 1, 2005. Pomona Services Inc. anticipates earnings per share of $5.00 for the year ending Dec. 31, 2005. It is anticipated that every year the firm ploughs back approximately 30% of its earnings into new investment projects with an average return on book equity of 20% for a long time.

   What is the growth rate for the firm?

   1. 4%

   2. 5%

   3. 6%

   4. 7%

   5. 10%

2. Question 63

   1 Point

   What is the price of the Pomona's stock if the required return on a similar investment is 16%?

   1. $20.5

   2. $30.25

   3. $35

   4. $40

   5. $50

3. Question 64

   1 Point

   What is the dollar value of growth component of the earnings, i.e., PVGO in the current

   market value?

   1. $3.75

   2. $4.33

   3. $8.33

   4. $11.23

   5. $13.67

4. Question 65

   1 Point

   What is the current Price/Earnings ratio?

   1. 7

   2. 8.5

   3. 10

   4. 12.5

   5. 14